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June 2014

Investing amid inflation, low interest

The Janet Yellen Fed clearly is paying close attention to the labor markets, and she has remarked several times that she thinks the unemployment level is unacceptably high. She sees a lot of slack in the labor markets and is particularly interested in seeing wages rise. The labor force participation rate also is key for Yellen as she has indicated that this indicator, too, must also be on the rise …Read More

Hedging against oil spikes

The recent turmoil in Iraq has led many people to believe that the price of crude oil could spike and derail the economy. Jay Leno once joked, “There was a sign at the gas station near by my house that said, ‘We take Visa, MasterCard, Discover Card, and American Express.’ After I filled up, they took my Visa, Master Card, my Discover Card, and my American Express.” The price of …Read More

Monetary, fiscal farce in Europe continues

First published at RGJ.com http://www.rgj.com/story/money/economy/2014/06/15/robert-barone-monetary-fiscal-farce-europe-continues/10515411/ The  European Union economies have been in, or nearly in, recession since the financial crisis in ’09. Greece has had to be bailed out several times. Spain, too, and in the case of Cyprus, bank depositors bore much of the cost. Italy and Portugal are lucky they avoided such bailouts. But that doesn’t mean they are healthy. The unemployment rates in the major European Union  …Read More

Bond strategies for low rates and rising inflation

First published at Marketwatch.com http://www.marketwatch.com/story/bond-strategies-for-low-rates-and-rising-inflation-2014-06-16 Interest rates fell far this year and could stay low for some time. The world is awash with liquidity as central banks around the globe maintain highly accommodative monetary policies. The yield on the benchmark 10-year U.S. Treasury bond started 2014 at 3% and has since fallen to around 2.5%. The 10-year yield bottomed below 1.45% in 2012. Jeffrey Gundlach of the DoubleLine funds thinks …Read More

Income options for retirees

Retirees who need income today may find it very challenging to produce their desired cash flow. Interest rates are well below historical norms. As a result, many retirees are stretching for yield and buying high-yield bonds and bond funds and dividend paying stocks. The risk-reward ratio in the high-yield bond market isn’t too good right now, and investors may not be getting compensated for the risks they are taking. Dividend-paying …Read More

The European Farce: Part 2 — How to Grow GDP

First published in Minyaville.com http://www.minyanville.com/sectors/global-markets/articles/The-European-Farce-Part-3-How/6/12/2014/id/55270 Without a growing GDP, the size of the deficit must shrink. The EU economies have been in or nearly in recession since the financial crisis in 2009. Greece has had to be bailed out several times.  Spain, too, and in the case of Cyprus, bank depositors bore much of the cost.  Italy and Portugal are lucky they avoided such bailouts.  But, that doesn’t mean they …Read More