Muni bond funds run by Pacific Investment Management Company (PIMCO) have seen their distributions cut by as much as 45% after a jump in short-term rates droves up borrowing costs. As recently as October, analysts urged investors to jump into munis for their high yields with no regard for what might happen when rates rise. It turns out, reaching for yield can be dangerous. Bloomberg's Martin Z. Braun reports: Pacific Investment Management Co. cut monthly payouts on nine municipal bond closed-end funds by as much as 45% after a sharp jump in short-term rates increased borrowing costs. The … [Read more...]
Archives for January 2023
Cato’s Chris Edwards on Economists’ Predictions
Your Survival Guy’s had the pleasure of speaking with Chris Edwards of the Cato Institute at various benefactor gatherings. This is a good read from Chris per usual. Contrary to the confident‐sounding claims of experts in the media, economists cannot accurately predict the macroeconomy. Economists have an awful record at forecasting inflation, interest rates, gross domestic product, and other macro variables. Below I excerpt from a Wall Street Journal column summarizing the failed record of forecasting 2022’s inflation, interest rates, and stock market. This is important for public policy … [Read more...]
UPDATE: New Rules for Required Minimum Distributions
As reported in the WSJ: New legislation raises the age taxpayers generally have to start taking required minimum distributions, known as RMDs, from their retirement accounts from 72 to 73 years old, beginning in 2023. That means if you turned 72 in 2022, you have until April 1, 2023, to take your first RMD, the one for 2022, and you’ll have to take another for 2023 by Dec. 31, 2023. If you turn 72 in 2023, your first RMD will be for 2024, the year you turn 73, due on April 1, 2025. Unfortunately, the legislation doesn’t do anything to address the confusion surrounding the new 10-year payout … [Read more...]
Institutional Investors “Lulled Into Complacency” by VC “Phoney Happiness”
Through a comparison of venture capital to Kathie Wood's Ark Innovation ETF, Daniel Rasmussen, suggests in the Financial Times that institutional investors are "lured by promises of higher returns and lower volatility," but are "lulled into complacency, paying an illiquidity premium for the “phoney happiness” of private marks." He writes: Consider an institutional investor looking to add growth/tech exposure at the start of 2020. They could choose between allocating to Cathie Wood’s Ark Innovation exchange traded fund or to a VC fund. The ETF was on a great run, beating both the Nasdaq and VC … [Read more...]
CHIPS: From Shortage to Surplus
A year ago, everyone was talking about chip shortages and the kinks they were causing in supply chains. Now, there are more semiconductor chips than needed, and surpluses are building up. Asa Fitch reports for The Wall Street Journal: The world is now awash in chips. The oversupply marks a sharp turnaround from a global shortage during two years of supercharged demand. Consumer appetite for electronics has weakened against a backdrop of rising interest rates, a falling stock market and recession fears. Chip inventories are swelling, mirroring what is happening in the wider economy where … [Read more...]
Happy New Year!
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