Bonds

In this note, Dr. Tiemann analyzes the assertion that Dodd-Frank financial reform legislation, passed in the aftermath of the financial crisis, has contributed to a decline in the liquidity in the bond market.  Dodd-Frank set out to moderate the risks that banks might take with their balance sheets but Wall Street has tried to argue that the law’s restrictions impair the profitability of bond dealing, resulting in declining liquidity of the bond market and therefore could cause a market disruption.  Dr. Tiemann utilizes the underlying data of bond trading before and after to evaluate Wall Street’s assertion and used the show boxplot to show how bond trading liquidity has increased since Dodd-Frank was implemented.

This note helps readers understand how corporate management thinks about and makes deliberate choices about their capital structure, depending upon market conditions, discount rates, level of employment in the economy and other factors. A refresher on Modigliani and Miller, and assessment of why companies appear to be doing better yet unemployment remains high.

Discusses why governments need private savings to maintain stimulative fiscal policies and why channeling those savings into investments is best. Review of the Keynes paradox of thrift, the need to reduce deficits but also how that can also be a recipe for disaster. Describes how the Feds can avoid igniting inflation and why government spending and borrowing can prevent deflation.

Increases in the market risk premium analyzed, with assessment of implications for individual investment strategies relative to risk tolerance and investment timeframes, as well as risks to corporations with and without access to capital, in their abilities to prosper and produce superior returns.

A "no-holds-barred" review of the cast of unregulated characters on wall street who stand to earn fees on the transactions relating to home purchases and mortages by individuals, regardless of the ability of the homeowner to pay or the merit, quality or appropriateness of the issuance of the mortgage.

A discussion and primer on the hidden costs of mutual funds, the primary types of "pre-packaged" investments that many investors get "advised" to put their money into. This is a must-read for investors who want to know what their advisor earns, what their real costs are for owning mutual funds, and why total fees are not easy to ferret out even when you delve into the fine print of those pesky prospectuses.