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Donald van Deventer

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  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    Everyone needs forecasts, even Santa Claus, who needs a weather forecast. Thanks for your comment!
    Apr 18 01:19 PM | Likes Like |Link to Comment
  • Projected T-Bill Rates Jump 0.25% In 2017-2018, Peak Still Seen In 2021 [View article]
    Perhaps, but keep in mind that the forward rate curve (what's described in the blog) is just a bit above the mid-point of everything that could come about. Things could be much higher or (like Japan) much lower. Good luck!
    Apr 18 01:17 PM | Likes Like |Link to Comment
  • Credit-Adjusted Dividend Yield: A Comcast Corporation Example [View article]
    Gentlesword, thanks for the comment. I am in the Warren Buffett school on dividend policy ("if you need cash, sell the stock") and so I have been surprised by two things: how many companies pay dividends at all, and how much "dividend yield" is mentioned on seekingalpha.com and other sites (and a related phenomenon, how many dividend focused ETFs there are). Just trying to chance the focus slightly for greater insight.
    Apr 17 10:17 AM | Likes Like |Link to Comment
  • Vodafone Group PLC: The Bond Market View [View article]
    Nicholas, we're at 388,571 page views so far, but we'll miss you nonetheless.
    Apr 15 07:01 PM | Likes Like |Link to Comment
  • Vodafone Group PLC: The Bond Market View [View article]
    Dear Total,

    The devil is in the details. To use another analogy, some people check out early from the world's finest hotels. For that type of reader, you can stop at the conclusion on page 1 of the blog. Thanks for reading!
    Apr 15 02:14 PM | Likes Like |Link to Comment
  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    Rob, sorry for the delay. In the old days, Libor used to be a decent index of the marginal cost of funds for major banks around the world. Because of that, it was a convenient benchmark (from the banks' point of view) for loan pricing, because pricing a loan at a spread over Libor assured their profit margin as long as the bank's true cost of funds was highly corrected with Libor. Since about 2005, many lawsuits and related testimony has made it clear that the banks have been manipulating the rate. We don't recommend using Libor in any capacity as we don't believe the flaws in the design of Libor as an index are fixable. Instead, we recommend a true cost of funds index you can find in our instablogs labeled "U.S. Dollar Cost of Funds Index." Thanks for reading.
    Apr 14 12:16 PM | Likes Like |Link to Comment
  • The 20 Best Value Bond Trades With Maturities Of 10 Years Or More [View article]
    Jake, no we don't. We provide investment and risk information and believe it would be a conflict of interest to own securities ourselves or to provide brokerage services. Thanks for asking.
    Apr 14 12:13 PM | Likes Like |Link to Comment
  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    Rob, thanks--I will get back to you on Monday. You deserve a better answer than I can give late on Sunday night.
    Apr 14 12:53 AM | Likes Like |Link to Comment
  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    Gary, forward rates are what's in the blog. It's the market forecast embedded in bond prices, not a crystal ball prediction like most of what you see in common stock analysis. If you are not sure of the difference (and it seems like you are not), you should find a high quality financial advisor. Good luck.
    Apr 13 02:15 PM | Likes Like |Link to Comment
  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    I'm 99% through with Thomas Sargeant's (Nobel Prize in Econ, 2011) "Rational Expectations and Inflation" 3rd edition. He goes through the experience in Germany, Austria, and France in the wake of World War I. He makes a strong case that it is the perceived determination of a government to run a balanced budget on average over time (so the central bank does not have to print money, otherwise known as QE, in order to fund long run deficits) that either holds inflation in check or sets inflation in motion, even long before there is a change in money supply. I highly recommend the highly readable book--understanding doesn't suffer if you skip the 5% of pages with formulas.

    Japan, as always, is a special case--very low rates, very low expectations that the government will ultimately balance the budget...
    Apr 12 09:11 PM | Likes Like |Link to Comment
  • Projected T-Bill Rates Peak At 3.92% For 2021, Down 0.13% From Last Week [View article]
    Quite a serious comment for a raconteur, but thanks. The answer from a theory point of view is that the forward rates embed a risk premium of unknown size, so on average they should be biased high. One way to get at the size of the risk premium is to compare actual rates that come about with forward rates from, say, 6 months forward, 1 year forward and so on. We've done that work and are revising it soon and you will see it on SA. We're adding data from another country because even 50 years of US history isn't as much as a good statistician would want. Stay tuned.
    Apr 11 09:37 PM | Likes Like |Link to Comment
  • The 20 Best Value Bond Trades With Maturities Of 10 Years Or More [View article]
    Thanks for the very reasonable suggestion but our bond price data source restricts our redistribution of the CUSIPS. We would have to pay them (and charge our readers) if we did so. If you do a google search on the issuer, coupon, and maturity date, you will find the CUSIP, which is why the restriction on us is so bizarre. Sorry that I don't have better news for you. Thanks for your interest in the article.
    Apr 11 09:33 PM | 1 Like Like |Link to Comment
  • The 20 Best Value Bond Trades With Maturities Of 10 Years Or More [View article]
    When inflation hits, the only safe security is Treasury Inflation Protected Securities, and at many maturities over the past year TIPS have been trading at negative yields because of short supply. There are no easy escapes from inflation. I've been reading Nobel winner Thomas Sargeant's "Rational Expectations and Inflation" for just that reason. I highly recommend it.
    Apr 11 10:24 AM | Likes Like |Link to Comment
  • General Electric: Credit Spreads And Credit-Adjusted Dividend Yields [View article]
    Thanks SouthernSanta, I understand all that--these are issues embedded in the standard dividend yield calculation as well. We have more coming on those topics. Thanks for reading!
    Apr 10 10:29 AM | Likes Like |Link to Comment
  • General Electric: Credit Spreads And Credit-Adjusted Dividend Yields [View article]
    Bruce, I totally agree with you. The credit crisis proved that their wholesale funding strategy doesn't work in very bad times and, frankly, they're lucky they got bailed out.
    Apr 9 05:40 PM | 2 Likes Like |Link to Comment
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