08-13-2020: Minneapolis Fed President: 'Six-Week Economic Lockdown Needed To Defeat Coronavirus'
InvestTalk
Hosts Justin Klein & Luke Guerrero, CFA | Wealth Managers and Investment Advisors
4.4 • 1.5K Ratings
🗓️ 14 August 2020
⏱️ 47 minutes
🧾️ Download transcript
Summary
What will happen if the U.S. economy is forced to endure a new and more stringent shutdown in order to 'kill COVID'?
Today's Stocks & Topics: LCA - Landcadia Holdings II Inc. Cl A, Yields, The Bond Market, Roth I-R-A & Taxes, XEL - Xcel Energy Inc., TWOU - 2U Inc., Best ETFs, KODK - Eastman Kodak Co., Prenuptial Agreement, MFGP - Micro Focus International PLC ADR, Crypto Currency.
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Transcript
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| 0:00.0 | This podcast is produced by KPP Financial, Steve Peasley President, |
| 0:10.4 | KPP Financial, Independent thinking, shared success. |
| 0:15.0 | And now today's podcast. |
| 0:17.0 | Good afternoon fellow investors and welcome to |
| 0:26.3 | Invest Talk. This is our Thursday August 13th 2020 edition of Invest Talk and a lot to talk about today. The market looked subdued. |
| 0:40.0 | S&P was down, 0.2%, NASDAQ was up about 0.2%, right? So not a whole lot of market movements on that front, but there is a big change over the past week in the bond market. |
| 1:02.0 | And if you are paying attention over, geez, the last decade, you'll know that the |
| 1:09.3 | bond market is extremely important, right? Yields have been pushed lower and lower, what we call |
| 1:18.1 | financial repression. And that's what the Fed wants, right? |
| 1:24.0 | They're Keynesian. |
| 1:26.0 | They want borrowing and lower borrowing costs mean more borrowing. |
| 1:32.0 | Higher borrowing costs mean more borrowing. Higher borrowing costs mean less borrowing. |
| 1:37.0 | And that's been their playbook for the better part of 30 years. |
| 1:45.0 | Now lowering short term rates, that's one thing. |
| 1:52.0 | But a lot of investment vehicles including mortgages are tied |
| 2:00.3 | to at least the rates are tied to, the 10-year Treasury, which is not a short-term |
| 2:08.7 | instrument. |
| 2:11.1 | You argue it's long-term, maybe argue it's long term, maybe argue it's intermediate term, but it's certainly not short |
| 2:15.8 | term. |
| 2:16.8 | And over the past week, when the tenure hit 0.5%, we are now up 20 basis points, about 40% in a week to 0.716 at the close today. Similar thing happened in early June |
| 2:40.5 | before that rally peered out for a little bit and then what happened? |
| 2:47.3 | Interest rates went back down again. |
... |
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