Then when the same company sees a huge business opportunity and wants to quickly cash in on it, it may float bonds for the public to buy. Bond Investors are regarded as senior owners and lay a prior claim to the assets of the company before both the preferred stock and common stock investors can enforce their claims. In practical terms, if you buy the bonds of a company, the only way you'll lose your investment (if you don't trade it at a discount) is if the company closes down completely (nowadays, it's also called restructuring). I'm a very simple guy who loves reading, thinking, swimming, photography and trying new stuffs.
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Updated: November 09, 2015 Here is the complete list of Glo Nigeria data bundle plans , price, activation codes and validity period. The Treasury Bond Vigilantes,– is a nickname that was used to refer to a legendary band of renegade bond traders, who used to fire-off warning shots to Washington, by aggressively selling T-bonds in order to protest any monetary or fiscal policies they considered inflationary.
Volcker reminded the new breed of Fed lackeys that the central bank’s basic responsibility is to maintain a “stable currency,” and that it should unwind its reckless scheme of massively increasing the US-money supply and blowing bubbles in the stock market.“Credibility is an enormous asset. Already, the ratio between the value of the Dow Industrials and 10-year T-note futures has reached the 116-level, – doubling from the 58-level – where it bottomed out in March ’09, and is within striking distance of its 2007 high. Minor Earthquake in Tokyo Bond market,– The recent sharp slide in US T-Notes was preceded by a tremor in the world’s second largest bond market in Tokyo. If this exodus from the JGB market continues, it could blow apart the BoJ’s Ponzi scheme. Japan’s outstanding debt is equivalent to 245% of its annual economic output, and 92% of the debt has been financed by domestic savings. So far, the immediate impact of the BoJ’s Big-bang QE scheme has been a rapid and parabolic rise in Tokyo stock prices. In fact, both the BoJ and the Fed are in the crosshairs of the Bank for International Settlements (BIS), which warned on June 2nd, about the dangers of their ultra-cheap money policies that are driving up stock prices, despite worsening economic news. In its report, the BIS went on to say that stock markets “are under the spell of monetary easing to the point where negative news such as downbeat economic data doesn’t stop stocks from going up. Every time an economic indicator disappointed, traders simply took that as confirmation that central banks would continue to provide stimulus,” such as near zero percent interest rates or QE schemes that increase the supply of money in the economy. However, Stephen Cecchetti, head of the BIS monetary and economic department, issued a warning to bankers and wealthy investors to prepare for an eventual normalization of interest rates that wouldcause additional losses for bond holders.
On May 22nd, Bank of Korea Governor Kim Choong Soo also warned that when the Fed pulls back from QE, it would spur risks worldwide from rising bond yields.“If the Fed begins to exit from quantitative easing policies, the world will be facing interest-rate risks, in terms of how much would bond yields rise,” he said. For More details on Trade & High Accuracy Trading Tips and ideas - Subscribe to our Trade Advisory Plans.
And for most of us, buying stock or bonds are the easiest way to own a company, at least a piece of a company. The bond investors will first be satisfied, then preferred stocks investors and lastly, the common stock investors.
But the reality is that a company that is healthy enough to fulfill its bond obligations will most likely be faring very well in the stock market, while a company whose stock is getting seriously bashed might end up not meeting it's bond obligations (except in some crazy exceptions).
After being mesmerized by the Fed’s hallucinogenic “Quantitative Easing,” (QE) drug, and seduced by the Fed’s Zero Interest Rate Policy (ZIRP), and rescued by the Fed’s clandestine intervention in the stock index futures market, for the past 4-?-years, it’s easy to forget that there was once a time when the Fed’s main policy tool was simply adjusting the federal funds rate. The jargon refers to the bond market’s ability to serve as a brake on reckless government spending and borrowing. Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment. The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. The 85-year old Fed hawk still commands a lot of respect on Wall Street and his voice is not easy for the Fed’s rookies to tune out.
Since May ’12, traders have played the “Great Rotation” – shifting out of bonds and moving into stocks, seen as the best way to profit from the Fed’s radical schemes. A last gasp rally in the US-stock market could be the catalyst that triggers a sharp sell-off in T-notes. At that point, the “Dangerous Divergence” could reach the breaking point, leaving the bond vigilantes to do their dirty work. On April 4th, the Bank of Japan’s (BoJ) new governor, Haruhiko Kuroda, unveiled the most radical scheme ever, – designed to “shock and awe” Japanese bond traders into complete submission. It was the Nikkei’s biggest one-day fall in 2-years, and kicked off an extended -17.5% slide to 13,050 by June 3rd. That’s the lowest level in nearly four years and the reading under 50 indicates contraction. They come up with a mind-numbing valuation of the company and break it down into million units of shares.
It’s even harder to recall that two decades ago, the Fed’s raison d’etre was combating inflation, whereas today, the Fed’s main mission is rigging the stock market, and inflating the fortunes of the wealthiest 10% of Americans.
The last major sighting of the bond vigilantes was in Europe, as they wrecked havoc upon the debt markets of Greece, Ireland, Italy, Portugal, and Spain.
Indeed, – the long-end of the US Treasury bond market suffered its worst monthly decline in 2-?-years, as yields jumped to their highest levels in 13-months. That’s because the Fed has so badly distorted and inflated market prices over the last few years. The risks of encouraging speculative distortions and the inflationary potential of the current approach plainly deserve attention,” he warned. The recent plunge in T-bond prices did trigger a knee-jerk sell-off in the stock market, that briefly knocked the Dow Industrials lower to the 15,100-level.
However, the so-called T-bond vigilantes appeared to be dead and buried over the past few years, as the US-Treasury was able to borrow trillions of dollars, largely financed by the Fed at the lowest interest rates in history. But in a June 3rdnote, Goldman Sachs (GS) released a message to the financial media, telling investors to remain calm amid the bond market sell-off. The BoJ has calculated that a rise in JGB yields of just 1% would lead to market losses equivalent to 10% of the core capital for the top Japanese banks, and 20% losses for the smaller regional banks. Keeping the T-bond vigilantes on ice, is a key linchpin of the Fed’s Ponzi scheme, that’s used to inflate the value of the US-stock market and keep it perched in the stratosphere. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse,” Volcker warned. The maneuver provided a solid foundation for the British pound to rally strongly against the Japanese yen, thereby encouraging carry traders to borrow cheaply in yen, and plow the cash in high yielding Footsie blue chips. If you are extremely rich, you can decide to buy all the company's shares and make it your family business.
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