Blackstone’s Baratta Sees Stock Rally Lasting Two Years – Bloomberg 12-05-13

Salient to Investors:

Joseph Baratta at Blackstone said:

  • The stock market rally may last 2 more years with compound annual growth of 8% to 10%, as long as the Fed provides support.
  •  Equity markets are not overvalued when measured by the prices buyout firms are paying for companies.
  • US economic fundamentals are strong, sentiment is very positive, earnings have been growing, the Fed is quite accommodating.
  • Private-equity firms have been taking profits – Blackstone has sold $10 billion in assets in the past 12 months.
  • Higher interest rates and weaker markets 5 years from now could make it harder to profit from selling investments. With the Fed expected to begin scaling back QE, Blackstone is seeking deals that require less debt financing because the next buyer will have less access to capital and it will cost more.

Kyle Bass at Hayman Capital Mgmt said many investors are wise to buy stocks, and equities are the natural place for pensions and hedge funds.

Industry players from Leon Black at Apollo Global Mgmt to Wesley Edens at Fortress Investment said the Fed-fueled market rally makes it an ideal time to exit investments. Black says it is a fabulous time to be selling and is selling everything that is not nailed down in his company’s portfolio.

Read the full article at http://www.bloomberg.com/news/2013-12-05/blackstone-s-baratta-sees-stock-rally-lasting-two-years.html

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Debt of One Quadrillion Yen? Not a Problem – Bloomberg 08-15-13

Salient to Investors:

William Pesek writes:

A week after Japan’s debt reached the 1 quadrillion yen ($10.28 trillion) mark, yields have actually declined. BOJ Governor Kuroda is winning bondland’s full obedience with two forms of trickery: essentially transferring money via monetary policy from citizens to the government, and outright monetization of public debt. The longer Kuroda gets away with it, the better the chances Abe can pull off his own miraculous feat of deregulating the economy.

Japan has an impossibly large debt load, an aging population and a propensity for political paralysis. Japan’s debt is larger than that of Germany, France and the UK combined. Japan’s 10-yr yields are at 0.74 percent versus 2.76 percent in the US, which prints the world’s reserve currency, has a higher credit rating and a growing population.

Government bonds are the main financial asset held by banks, companies, pension funds, universities, endowments, insurance companies, government-run institutions, the postal-savings system and individuals. Bondholders got the message that it would be in everyone’s best interest to keep a lid on debt yields, accelerating a huge redistribution of wealth from the people to the government.

The BOJ is buying up ever-bigger portions of government debt at auction. If Abe’s big talk of structural reform is not met with action, then Kuroda is creating the biggest bubble in history.

J. Kyle Bass at Hayman Capital Mgmt has been predicting a Japanese collapse since 2010.

Read the full article at  http://www.bloomberg.com/news/2013-08-15/debt-of-1-000-000-000-000-000-yen-not-a-problem.html

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Bass Says Japan Bondholders’ Reaction to Stimulus Telling – Bloomberg 04-09-13

Salient to Investors:

Kyle Bass at Hayman Advisors, who has been betting on a collapse in the Japanese bond market for at least 3 years, said Japanese government bondholders’ reaction to the BOJ’s stimulus may foreshadow a broader selloff. Bass said this is the first deviation of the sanctity of that marketplace, and investors ran the other way from the BOJ and not with it.

Read the full article at http://www.bloomberg.com/news/2013-04-09/bass-says-japan-bondholders-reaction-to-stimulus-telling.html

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