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« Weighing the Week Ahead: Will the Fed Change Course? | Main | Weighing the Week Ahead: How Will Markets Digest the New Fed Message? »

June 20, 2013

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oldprof

Art -- Not exactly a proxy, since there are many valuation factors and tax considerations.

With that in mind, the attractiveness for many is the yield, which will trade at a spread to risk-free rates. If those rates go higher, and the spread remains the same, the MLP value will decline.

Jeff

Art

Do you consider MLPs to be a proxy for bonds?

oldprof

Praxeologue -- I am not using the Fed forecast in particular. I follow the Blue Chip economics survey, the WSJ survey, and updates from private firms like MacroEconomics. You could do a youtube video on any source, because there have been a series of interruptions to the return to normal growth -- including events like the Japanese tsunami, the European austerity push, and U.S. fiscal drag.

The private economic surveys call for 2.8% in 2014 and the Fed is at 3.2%.

I agree with you that we should not depend just on government estimates. The Fed estimate does have special interest because they have a strong team of 350 or so economists and it is what they are using. I want to know what they are thinking.

Jeff

Praxeologue

But with respect, in regards to not listening to those who have been wrong for years, you use Fed forecast of future growth to justify owning certain stock sectors but the Fed's record has been the most wrong at the most critical times and has been permanently over optimistic about growth. Any one familiar with youtube can find complications of their clangers.

Claude

Hi Jeff,

who's the best investor? an accountant who can analyse a stock and find good value or an economist who will invest according to his study in the economy?

Do the average investor loses to much time worrying about interest rate, GDP and so on?

Right now, I find good value, with growth and good dividend (in the canadian market) and I read all of your post and I know there is no recession ahead. So I invest all of my capital and I sleep like a baby.

Thank you very much for your good work!

rafaminos

Jeff,

this is very well articulated.

Most of the crowd has not undersdood that, as always, QE is data dependant and not just exogeneous.
The natural rate moves with the state of the economy.

If anything, the 7% threshold has clarified further the exit strategy, which is a good news.
One can just wonder if, as it has been the case for several years, the FED is not too optimistic.

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