CLIENT LOGIN
-
-
INVESTMENT INSIGHTS
-
BACK TO INVESTMENT INSIGHTS
BACK TO ARTICLES & INSIGHTS HOME
-
-
-
-
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years of experience as an institutional portfolio manager, investment strategist, and investment consultant.
UNDER MY THUMB
Published: 11-20-2015As Mick Jagger sang (screeched?) 50 years ago. The song was about turning the tables on a domineering woman (The girl who once had me down).
A bit sexist, to be sure, but the song came to mind when looking at this week’s government bond auctions around the world (isn’t my life fascinating?). Our clients have been complaining about the low yields they are earning (as if I controlled that), and my response has been: count your blessings. You can lend the US government money for a year and earn half of a percent (50 cents per $100), or extend the loan for 2 years and earn almost 1% (91 cents per $100 to be precise). That’s infinitely more than almost anywhere else in the developed world.
In Europe, all short-term government debt (except Greece and Portugal) carry negative yields. Two-year German bunds yield -0.38%, a bargain to Sweden’s -0.47% and Denmark’s -0.70%. Even Portugal (!?) sold 1-year bonds this week with negative yields. Yields in Europe have been negative for the past year, and are getting more so (Chart below). So while the yields are negative, prices have risen steadily, making those investors seem pretty smart (so far).
Most extreme is Switzerland (of course). Mattresses are (apparently) in short supply in Switzerland (so what do people sleep on?), because rather than sticking cash under a mattress, ensuring you’ll get the same amount when you want to spent it later, investors are pleading with the Swiss Central Bank to lend it money for the next decade with the promise of returning a little less of it (see below—positive yields in Switzerland are found only beyond 20 years).
Why this is, is a deeper question. I’ve talked about this in my quarterlies, and it looks like it’s a topic we’ll have to come back to. For now, we’re all under the thumb of central banks, who have us, and are keeping us, down.
-
More (Not Necessarily) Beach Reading 07-29-2019
For many people, the beach is an escape, and they want their beach books to transport them to worlds of fantasy. Coming ...
READ MORE -
Breathe 12-20-2018
Twenty-five hundred years, Siddhartha Gautama practiced a form of meditation that involved controlled breathing. Much ...
READ MORE -
Criminals in Diapers 08-05-2015
Japan grew from the (literal) ashes of the Second World War to become the second largest economy in the world by ...
READ MORE
-
-
-
INSTITUTIONAL
-
PRIVATE WEALTH
Get the latest investment information and stay on top of market trends.
-
-
CONTACT US
SANTA MONICA
INSTITUTIONAL & PRIVATE 429 SANTA MONICA BLVD
SUITE 650
SANTA MONICA, CA 90401
310.393.6300
GET DIRECTIONS -
NEW YORK
PRIVATE WEALTH 375 PARK AVENUE
SUITE 2607
NEW YORK, NY 10152
212.451.9290
GET DIRECTIONS