23 февраля, 23:32

В городах-героях дали прздничный салют в честь Дня защитника Отечества

Для шумового эффекта были произведены холостые выстрелы из пушек калибра 76 мм ЗИС-3 времен Великой Отечественной войны

23 февраля, 23:31

The Return-Free Risk of Bonds

I've read too many posts / articles that outline why a rise in rates is good for a long-term bond investors as that would allow an investor to reinvest at higher rates. While this can be true depending on the duration of bonds owned and/or for nominal returns over an extended period of time, it is certainly not true for most bonds these articles have referred to over shorter periods of time and absolutely not good for an investor in real returns... even over a very long period of time.BACKDROPI'll take a step back and go to an interesting question asked by George Pearkes the other day (slightly translated for clarity):Anyone care to estimate how big losses would be if you rolled 10 year US Treasuries at constant maturity for next 10 years w/ 25 bps of rate rise per quarter?My response (completely translated from Twitter speak for clarity) was:A 25 bp move per quarter is roughly a 2% loss per move given the current duration of around 8 years (0.25% x 8 = 2%).So this would lose money each quarter until the yield (currently 2.4%) is greater than 8% (8% / 4 quarters is a year = 2%, which would offset the loss from the rate hike). Given an 8% yield would happen during year 6 (6 years x 4 quarters x 0.25% = 6% hike + current 2.4% = 8.4% at the end of year 6).Year 6 is around midway of the 10 year horizon, so total return would be close to 0% cumulative over the ten years.This was pretty close to being correct. The chart on the right shows the path of rates assuming a 0.25% rise per quarter, while the chart on the left shows the cumulative return for an investor (slightly above 0% over this period).In the above example, a 0.25% rise per quarter (1% per year) is pretty extreme, but if a rise is good for bonds then perhaps a bigger rise is even better? As we can see, over an intermediate time frame this is not true as the smaller 50 bp / year increase in rates scenario outperformed.YOU CAN'T EAT NOMINAL RETURNSThe problem for investors is that a rise in nominal rates does not occur in isolation. A rise is typically a function of a credit concern (more likely with corporate / muni debt than treasuries), supply / demand imbalance, or inflation. For this exercise, I'll focus on the impact of inflation.Nominal rates moved relatively closely with inflation from the early 1980's until the global financial crisis as investors demanded a real rate of ~2% over that period (the recent period of QE pushed them much lower). It's the 1970's that highlights the real risk of inflation in a rising rate scenario; inflation overshot expectations, which created an environment in which inflation pushed real rates into negative territory (bond investors lost from rising rates and negative real carry).Back to the scenarios... taking the same 0.25% rise in rates per quarter (1% / year) shown above and applying two alternative inflation paths, the left hand chart below shows the return profile if real returns were a constant 5% (i.e. inflation was consistently 5% below nominal treasury yields - in itself very optimistic for investors), while the right hand chart shows the return profile if real returns were a constant 2% (i.e. 3% higher inflation on the right hand side than left). In either scenario, the returns are decimated (not surprisinly... when inflation is higher, they are decimated more).If you think the nominal return paths are too pessimistic (likely), let's take a look at some more optimistic paths towards interest rate normalization. On the left we show a 50 bp rise per year (settling at ~7% yields with 2% real yields) and on the right we show a 25 bp per year scenario (settling at ~5% with 1% real yields). Still material losses in real terms.Still too pessimistic? Now on the left hand chart we show a 10 bp rise per year (settling at ~3.5% yields with 1% real yields) and on the right hand chart we show a 15 bp per year scenario (settling at ~4% with just 0.5% real yields). There are still losses in real terms.My takeaway... if you think rates are poised to rise in the future... think twice about owning them. While the risk-free return of cash is hard to accept at current levels, that return may end up being more attractive than the return-free risk of bonds if rates are to rise.EconomPic Data: Darn Nice Economic Eye Candy

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23 февраля, 23:30

Умер Алексей Петренко |

Оригинал взят у vladimir_dianov в Умер Алексей Петренко |22 февраля скоропостижно скончался замечательный российский актер Алексей Васильевич Петренко. На его счету более семидесяти ролей в кино и на театральной сцене. Среди самых заметных картин с участием Алексея Петренко можно отметить фильмы: «Двадцать дней без войны», «Агония», «Сказ про то, как царь Петр арапа женил», «Ключ без права передачи», «Женитьба», «ТАСС уполномочен заявить», «Жестокий романс», «Узник замка Иф», «Сибирский цирюльник», «Пиры Валтасара, или Ночь со Сталиным», «В августе 44-го…», «Идиот», «Черная Рада», «Доктор Живаго», «Не хлебом единым», «12».Алексей Петренко в роли Мокия Парменыча Кнурова. Кадр из фильма Э. Рязанова "Жестокий романс" (1984)Об гениальной актерской игре Алексея Петренко хорошо сказал однажды Лев Аннинский: «Он «свернут внутрь». — Он загадочно не контактен по отношению к текущему вокруг действию. Даже там, где по внешней задаче отрабатывает быстроту и легкость, — внутри словно какое-то ядро чувствуется: мощное, невидимое и не сдвигаемое. Он как камень посреди потока: стоит сам по себе… Петренко — как совершенно независимая величина, добавляющая действию какое-то странное, четвертое, что ли, измерение».

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23 февраля, 23:30

Federal Reserve announces results of offering of seven-day term deposits on February 23

Federal Reserve announces results of offering of seven-day term deposits on February 23

23 февраля, 23:30

Путин: Россия продолжит укреплять Вооруженные силы

Президент РФ также подчеркнул, что растущие возможности отечественного ОПК "позволяют уверенно реализовать все наши масштабные планы". Он выступил с речью на организованном Минобороны праздничном концерте по случаю Дня защиты Отечества.

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23 февраля, 23:28

DNC candidate Jaime Harrison quits race, backs Tom Perez

Withdrawal of South Carolina party chair leaves contest with no current or former state party leader left in race.

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23 февраля, 23:28

'No more powerful ally than the NRA’: Group names itself leader of Trump's #counterresistance

"Already, the forces that conspired to keep Donald Trump out of the White House are coming together to sabotage his administration,” NRA executive vice president Wayne LaPierre says.

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23 февраля, 23:28

Shorting Opportunities in Financial Markets (Video)

By EconMatters We discuss the wonderful shorting opportunities there are in Financial Markets right now in this video. There are a lot of Market Dislocations right now, many stocks are set up for massive repricings over the weaker investment months of the year. © EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle   

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23 февраля, 23:28

'A Man Ahead Of His Time': What Booker T. Washington Understood About Entrepreneurship

Booker T. Washington was a man ahead of his time. By requiring each student to master at least two trades, he ensured that they would be able to contribute to the betterment of society; be self-supporting after graduation; and become independent business people rather than wage-earners or servants.

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