atans1

Yes We Can

In Uncategorized on 16/11/2016 at 4:47 pm
Have Economic Stimulus

NYT Dealbook

By Amie Tsang

Sell government bonds and pile into stocks that will benefit from a free-spending Trump presidency. That’s the verdict from global investors at the moment.
The financial crisis led to a wave of activism from global central banks to make money available. Investors followed their lead, loading up on long-term government bonds while growth was stagnant and political risk abounded. These investors now seem to be on board with Donald J. Trump’s promise to stimulate the economy.
They are also betting on the price of commodities important to the building business like copper, in anticipation of a pickup in government spending. Bank stocks have been bolstered by the belief that the industry will face less regulatory pressure. Higher interest rates would also help their lending margins.
This is not without its risks. If bond yields — which move up as prices go down— shoot up too sharply, investors in the stock market could get jittery and turn tail, leaving chaos in their wake. A sharp increase in bond market rates will also put pressure on emerging markets if investors are drawn by higher interest rates and a stronger American dollar.
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