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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • When Will "Rates" Begin To Rise Again? 0 comments
    Aug 15, 2013 12:52 PM

    Perhaps its somewhat of a chicken and egg question, but I've been thinking of perhaps not so normal ways to judge when the tide concerning interest rates will really begin to turn in earnest per se.

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    As we've perhaps all noticed, private equity has really taken the ball and run with it when it comes to buying very large public companies. Dell being targeted etc etc. At conferences etc, there have even been discussions of valuations being driven up by private equity's access to low interest rate credit per se, and hence bidding wars fueled by cheap credit are perhaps kind of the theme of the day for this age of buyouts.

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    None the less, this got me wondering if perhaps all companies that can be(attractive enough etc etc) taken private, being taken private as a harbinger for rates rising. I know that there are other things one could look at like, the maturity of specifically rated(as in with specific interest rates) notes expiring etc etc, but perhaps this might be another way of looking at things. Perhaps this might initially seem like a chicken and egg sort of discussion, but given the anthropological/sociological per se discussion of the motivations of modern democratic policy makers, and their connection to the fed, this might seem more plausible per se.

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    On the other hand will perhaps exogenous factors like rate rises, call for the end of the PE spree, perhaps this involves, questions about which begets which, but either way this could be an interesting paradigm via which to predict rises in interest rates per se.

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    Is this good or bad? Perhaps this is a question that has a two sided answer like the basis for the presumption being discussed here. Perhaps it could be good in that it could further enable the "everyone a shareholder/stakeholder" equilibrium phase of capitalism, since many PE firms are public, not on a project level, but on a company level, but perhaps at the same time, this might make another layer of fees via which one would have to discount an investments yield, due to the indirect nature of this type of investment(not buying a companies stock, but simply a share in a very big PE pool per se). This might ultimately also stabilize markets, for investments which are like indexes in and of themselves, owning much of the world's worthwhile per se, corporate equity, might detract from market volatility overtime, at least from volatility not related to said pools rebalancing their own portfolios per se, but either way, perhaps it will be interesting to see how this phase of very-low interest rates plays out on the grander scheme of the ownership dynamics of much of the worlds most recognizable, and well known public(as of now) companies.

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