The Delivering Alpha Conference is taking place in New York City with hedge fund managers from across the country gathering to discuss investments and the investment market.
Ray Dalio (Trades, Portfolio) of Bridgewater Associates and former Treasury Secretary Tim Geithner started the day with a discussion on the debt markets and monetary policy. With central bank borrowing levels globally at 0% and below, market investors have been finding more security in equity dividends. Evidence for this can be seen in the returns from the Dow Jones Industrial Average up 3.84% for the year, currently led by gains from Verizon (VZ, Financial), Chevron (CVX, Financial), Caterpillar (CAT, Financial), IBM (IBM, Financial), Pfizer (PFE, Financial) and ExxonMobil (XOM, Financial).
Credit market investments have been affected globally by central bank borrowing rates and monetary policy. The Bank of England’s recent reduction in its central bank borrowing rate to 0.25% followed by the European Central Bank’s unchanged rate level last week have been the key focus for the credit markets. Other countries highly influencing the credit market with low central bank borrowing rates include Japan, Sweden and Switzerland.
While central bank rates are a key influence on the credit markets, asset purchasing plans that include government debt and corporate debt are also greatly influencing market yields. Dalio and Geithner discussed the market’s current debt cycle and the broadened use by central banks of corporate debt securities for economic stimulus in markets across the globe.
Disclosure: I do not own any stocks included in this article.
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