Both the big boys came out with papers in the past week, JG gives a rather decent explanation on immigration, brexit and markets in general whilst Bill Gross does touch upon questions that have been on his mind. Snippets are below and a link to both papers. Oh and I haven’t forgotten that today is voting day in Thailand, it’s time for me to cast my ballot and see how things unfold. We should roughly know  how things went 3 hours after voting poles close with the confirmation within 3 days. My own quick 2 cents on it, well I’d vote differently if I was in a different country – something to debate about privately.

On the investment front the equation remains the same: pushing stock prices higher are the twin forces of the Fed’s policy and corporate buybacks. Trying to push prices down is an impressive array of everything else: disappointing productivity, growth, and profit margins together with all our domestic and international political uncertainties. And now Brexit! It is a testimonial to the strength of those two bullish forces that they can steady the US market near its high, regardless, apparently, of what is thrown at it.

Source: GMO

Well now, I quickly thought, does he mean what is Victoria’s Secret or what is Victoria’s Secret? If it was the former, it could be just an innocent question about the mailer itself. If the latter, well, it was a path down which I wasn’t willing to travel…

Can capitalism function efficiently at the zero bound?

No. Low interest rates may raise asset prices, but they destroy savings and liability based business models in the process. Banks, insurance companies, pension funds and Mom and Pop on Main Street are stripped of their ability to pay for future debts and retirement benefits. Central banks seem oblivious to this dark side of low interest rates. If maintained for too long, the real economy itself is affected as expected income fails to materialize and investment spending stagnates.

Source: Janus