Sun, Feb 25, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Operation Twist will prevail – but will take time

Thursday, September 29, 2011

Written by: Stuart Thomson, Chief Market Economist, Ignis Asset Management. Issued by Ignis Investment Services Ltd. Authorised and regulated by the Financial Services Authority. This article contains the personal views of the author and do not necessarily reflect those of Ignis Asset Management.

Summary “The Fed has commenced operation twist in greater size than consensus expectations amid a pervasive air of gloom over domestic and global economy. We believe that Twist is an important milestone in the Fed’s journey of balance sheet expansion. It is a necessary step given the poor construction and implementation of both QE1 and QE2. It is designed to lower the term structure of interest rates to levels that are attractive for corporations to increase investment in long-term productive assets and escape the paradox of thrift.

“Companies have been hoarding cash on their balance sheets and investment as a percentage of profits has fallen to multi-decade lows. This reflects corporate liquidity preference in the wake of the credit crunch. This risk aversion will not dissipate in the near-term and particularly when there are concerns over the European Sovereign Debt crisis and the Fed’s own warnings that growth remains slow and that the risks to the outlook are biased to the downside. This suggests that while Operation Twist is an important stimulus, the economic impact of this stimulus will take time to prevail.

“Moreover, whilst operation twist provides an......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Art & Motion launches collectible car alternative investment vehicle[more]

    Komfie Manalo, Opalesque Asia: Luxembourg-based Art & Motion has launched a new investment vehicle dedicated to vintage cars and exceptional high-quality vehicles as this collectible market has grown exponentially the turn of the centu

  2. Opalesque Exclusive: Global Sigma captures February's long-vol trade[more]

    Bailey McCann, Opalesque New York for New Managers: Florida-based Global Sigma rode February's volatility to new highs. The firm's AGSF strategy is up +2.8 percent through February 16 and +4.2 percent YTD a

  3. Institutional Investors - Hedge funds regain their appeal for a $57 billion asset manager, Private credit strategies in stratosphere[more]

    Hedge funds regain their appeal for a $57 billion asset manager From Bloomberg.com: With volatility back on the radar, one of the Nordic region's biggest asset managers is considering relying a bit more on hedge funds to help oversee his portfolio. Mikko Mursula, the chief investment off

  4. Investing - All aboard for hedge funds as trade tide lifts shipping, Hedge funds pile into Time Warner in bet on merger success[more]

    All aboard for hedge funds as trade tide lifts shipping From Reuters.com: Forced to abandon ship after mistiming their investments five years ago, hedge funds are venturing back in a bid to profit from growing global trade flows. Around 90 percent of traded goods by volume are tran

  5. Investing - Hedge funds turn short on tech just as stock rally takes off, After biggest short, speculators slash bearish US bond bets as supply deluge looms[more]

    Hedge funds turn short on tech just as stock rally takes off From Newsmax.com: A key group of investors has just missed out on the biggest tech-stock rally since 2014. Hedge funds and other large speculators turned net short on Nasdaq 100 Index futures for the first time in 21 months, ac