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| English: Clockwise from top-left: Federal Reserve, Bank of England, European Central Bank, Bank of Canada (Note: Uploaded for use on Wikinews) (Photo credit: Wikipedia) |
What was forgotten in the excitement of bond bailouts by monetary policy institutions (e.g., Bank of Japan, U.S. Federal Reserve, European Central Bank, etc.) was the probability that the actions would do little to help the global economy. Until recent profit warnings by business cycle bellwethers like Caterpillar (CAT), until Philadelphia Fed Chief Plosser announced that mortgage-bond buying stimulus would not lower unemployment, investors seemed content to ignore economic difficulties altogether.
Adding fuel to global recession fears, Spanish 10-year yields have worked their way back above 6%. Until and unless Spain formerly applies for the ECB’s bond bailout, risky assets may continue to lose some of their luminescence. In fact, even after a formal request for bailout funds, the conditional nature of the funding may only deepen Spain’s horrific economy.
At the end of August and at the beginning of September, I advocated that total market investors consider downshifting to yield producers and inflation fighters. Inflation-fighting “faves” included funds like Vanguard REIT (VNQ) and SPDR Gold (GLD), while yield producers with wide historical spreads over comparable treasuries included funds like iShares FTSE NAREIT Mortgage REIT (REM), Guggenheim Multi-Asset Income (CVY), SPDR Barclays High Yield (JNK), iShares S&P U.S. Preferred (PFF), and PowerShares Emerging Market Sovereign (PCY). ... Continue to read.
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