Posted by Larry Doyle on April 8th, 2009 3:09 PM |
One of our Economic All-Stars is Bob Rodriguez of First Pacific Advisors. In the spirit of being totally equitable, I should have also posted Tom Atteberry’s name next to Bob’s. Bob and Tom were jointly named 2008 Morningstar Fixed Income Managers of the Year.
Bob is currently taking a leave of absence from First Pacific but Tom is equally outstanding. I had the pleasure of making his acquaintance while I worked at JP Morgan. Tom Atteberry is a pro’s pro. He spoke to Bloomberg earlier today and made these comments, which I took in longhand, so I am not quoting but I listened very carefully. Tom opined:
1. The current environment is the worst time to get into bonds. Why?
2. The creditworthiness of individuals and companies across the economy will only get worse from here and that deteriorating credit is not currently priced into the market.
3. U. S. government debt (Treasuries) represent NO value at current levels. If a fair expected rate of return is between 2-3% and a longer term rate of inflation is also between 2-3%, the rate on a 10 yr. maturity Treasury note should be in the vicinity of 5%. That note is currently trading at 2.85%. Don’t overpay for an asset just because somebody else is, in this case the Federal Reserve. (more…)
Tags: Bob Rodriguez, credit, deteriorating credit, Economy, Fed Buying mortgages, Federal reserve buying Treasuries and mortgage-backed securities, Federal Reserve shrinking their balance sheet, First Pacific Advisors, relative value of U.S. Treasuries, Tom Atteberry
Posted in Bob Rodriguez, Economy, Employment, Equity Markets, Fannie Mae, First Pacific Advisors, Freddie Mac, General, Ginnie mae, Inflation, Mortgages, Risk, Tom Atteberry | 4 Comments »