(Capital Trading Group) We have said this all along, the FED needs to get short rates above the 10yr rate to stop corps from arbing all the excess liquidity via debt for equity swaps aka share repurchases.The distortion of low interest rates has caused severe mispricing in all asset classes as everyone has become an interest rate arb. Who needs profits when you can fund yourself with debt, buy back shares, issue dividends and put off the day of reckoning some time far off into the future? Well you can do this as long as you can keep wage and cost inflation from eating too far into your profits, are we at that point? CTG_Weekly_Newsletter_10-4-18
The Bond Market Will Be The Bear That Crushes The Equity Market
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