STOCK MARKET WATCH -- Monday, 8 September 2014

[xchrom]

25. You Missed $1 Trillion Return Agreeing With Fed Naysayers

http://www.bloomberg.com/news/2014-09-08/you-missed-1-trillion-return-agreeing-with-fed-naysayers.html

If you agreed with all the academics, billionaires and politicians who denounced Federal Reserve monetary policy since the financial crisis, you missed $1 trillion of investment returns from buying and holding U.S. Treasuries.

That’s how much the government bonds have earned for investors since the end of 2008, when the Fed dropped interest rates close to zero and embarked on the first of three rounds of debt purchases to resuscitate an economy crippled by the worst recession since the Great Depression.

The resilience of Treasuries represents a rebuke to the chorus of skeptics from Stanford University’s John Taylor to billionaire hedge fund manager Paul Singer and U.S. House Speaker John Boehner, who predicted the Fed’s unprecedented stimulus would lead to runaway inflation and spell doom for the bond market. It also suggests investors see few signs the five-year-old expansion will produce the kind of price pressures that would compel Fed Chair Janet Yellen to side with the central bank’s hawkish officials as they consider when to raise rates.

“The doves continue to have the upper hand,” Scott Minerd, who oversees $210 billion as the global chief investment officer at Guggenheim Partners LLC, said in a telephone interview on Sept. 4 from New York. “There is a bias in the market that interest rates need to be higher. But that just isn’t based on sound analysis. Betting against the consensus on Treasuries has been a winning strategy.”