Month: May 2020

MarketWatch/Satyajit Das/5-14-2020

“In April, Moody’s placed 20% of its rated collateralized loan obligations (CLO) (valued at around $22 billion) on review. The decision carried ominous echoes of 2008 and the Great Financial Crisis, when collateralized debt obligations (CDOs) proved problematic for the U.S. and global economies. In the current financial crisis, CLOs, which — despite industry protestations to the contrary — share many of same structural characteristics as CDOs, may cause similar problems.”

USAGOLD note:  Das warns us of complicated scenarios potentially rendering complicated results …… an elaborate and perhaps ill-omened debt structure erected in the corporate bond market.

Financial Times/Michael Mackenzie/5-15-2020

“Debt is soaring and unorthodox policy stimulus from central banks is in overdrive, courtesy of coronavirus. For some investors, the cost of such efforts is inevitable: inflation will come roaring back in coming years.”

USAGOLD note:  Mackenzie says that though disinflation and deflation are the logical concerns at the moment there are factors at work in the economy that make the idea of inflation “not so abstract.” He says “holders of gold … sense their moment has come.”