dcftoapv

8 ms·

31.
by dcftoapv 7y ago
China and Europe have public healthcare and social safety. They've been much worse off than the US so far. I'm not saying that won't change, but to sit here and shit all over America's approach to limited government is a
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by dcftoapv 7y ago
Norwegian was struggling financially before COVID 19. This isn't surprising. Norway has one of the world's most robust social support systems. I'm confident that they will deploy it well here.
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by dcftoapv 7y ago
You're just making things up. We couldn't have increased interest rates if we wanted to because Europe had to hold their rates low to deal with their debt crisis. If we moved ours out of step then it would have caused appreciation
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by dcftoapv 7y ago
Too late for what? This was going to happen no matter what the fed did. If the mkt blew up because of inflation then your argument would make sense. That's not what happened.
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by dcftoapv 7y ago
wtf are you talking about? They were raising interest rates and rolling assets off their balance sheet for the better part of 2018.
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by dcftoapv 7y ago
Sorry, I want to clarify quickly that appleiigs is right that it isn't cost of insuring cash so much as depository risk. When I say cash, I mean currency as opposed to debt/equity, not physical bills.
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by dcftoapv 7y ago
No, it's not foolish. We need to keep markets liquid to avoid a lending crisis. That's why the fed announced asset purchases. They don't do them all at once. They buy steadily over a period of time to help keep prices stable.
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by dcftoapv 7y ago
That's kind of the thought, yes. Negative rates should not be sustainable for any significant period of time and most interest rate models are built on that assumption.
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by dcftoapv 7y ago
Look, I don't want to be alarmist, but the worst outcome here is not '08. It's the 1930s. This has caused material demand and supply side shocks that we haven't seen in my lifetime or my parents' lifetime. I'm
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by dcftoapv 7y ago
Obama's admin let one of the world's foremost financial institutions fail and caused a mass market panic / giant economic setback. Their reasoning was entirely political and caused millions of people to lose their jobs. I&#x2
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by dcftoapv 7y ago
We used to think that rates couldn't go negative for exactly the reason you just described. Turns out that assumption was wrong for a few reasons a) holding onto money is expensive b) in many cases banks have incentive to hold governme
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by dcftoapv 7y ago
The feds mandate is to maximize employment, stabilize prices, and moderate long-term interest rates. A big part of that is trying to avoid the 'bust' part of a boom-bust cycle. As evidenced by your post, the fed should not be acco
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by dcftoapv 7y ago
The problem is that fed action isn't enough. We need policy changes to keep SMEs above water. The White House and Congress have not taken appropriate action. Trump acted like he was going to take action on Friday, the markets ripped hi
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by dcftoapv 7y ago
You're right, and they made a lot of changes that are necessary to keep the global economy functioning over the next few months. I did not mean to imply that they shouldn't be taking action. I am very skeptical about cutting rates
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by dcftoapv 7y ago
Asset purchases will help to stabilize markets - The fed became a huge driver of liquidity from from 2016-2018 - There was a noticeable increase in market toxicity when they started letting assets roll of their balance sheet in 2018 I'
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by dcftoapv 7y ago
Adding some further nuance to this point: - Many other rates in existing contracts are tied to the fed funds rate so things like existing mortgage and student loan payments may get smaller as a result of this action - This will only work fo
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by dcftoapv 7y ago
This is not going to help - It takes two years for monetary supply changes to fully propagate through the economy - Cutting rates to 0% has not been effective in Japan or Europe The fed does have a role to play here - They can provide liqui
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by dcftoapv 7y ago
I don't agree. There are three things that normal investors should be doing right now: 1 - Assess how you feel. Are you upset by the loss of value? Then you make be more risk averse than you thought. It might be wise to reconsider your
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by dcftoapv 7y ago
This has introduced credit risk to impacted businesses as well. Credit risk means we could see less liquid debt markets which could decrease employment, investment, and long run GDP growth. All of this especially concerning given that the f
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by dcftoapv 7y ago
Free money doesn't help if nobody is willing to borrow it. US government needs to have targeted lending programs for impacted industries ready to go.
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by dcftoapv 7y ago
Your hot take is wrong. Cash flows are absolutely going to be impacted here. Initially, the thought was that this was only going to be a supply-side shock, but people are planning to completely hunker down, not booking flights, not travelin
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by dcftoapv 7y ago
You're betting against all of documented history. Also, your concern shouldn't be interest rate risk. Your concern should be a reversal in perceived credit risk. You benefited from a flight to quality. While these can persist m
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by dcftoapv 7y ago
Congrats, but you should sell out of that before prices come crashing back down to earth, which they inevitably will after the covid-19 scare passes. It might be a couple of months, but history says that you're going to lose all of tha
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by dcftoapv 7y ago
You've just discovered the Sharpe ratio. The part you're missing is that bond prices are just as volatile as equity prices in risk-on environments.
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by dcftoapv 7y ago
This is a fun and directionally interesting comparison, but it's ultimately meaningless. Cash flows with different durations can't be used in carry trades so this cannot be exploited even if you have a hypothesis about the relativ