As part of the Federal Reserve’s stimulus program, it has purchased record numbers of mortgage-backed securities and treasuries. What will happen to the economy when the Fed decides to liquidate some of its holdings? Our first article this week analyses Fed Chairman Ben Bernanke’s comments about a potential stimulus exit. We next turn to Howard Marks’ reasons for investing in high yield bonds. Holders of these bonds may be wondering if they are in a bubble due to last year’s strong performance and today’s historically low yields. We close with an footnote for those concerned about the Fed’s stimulus exit strategy and how it might affect their investments.  Jeffrey Gundlach of Doubleline explains why he believes the Fed’s exit strategy is irrelevant to today’s investment horizon.

Bernanke Provokes Mystery Over Fed Stimulus Exit- When Ben S. Bernanke asserted last month that the Federal Reserve doesn’t ever have to sell assets, he raised questions about how the central bank can withdraw its record monetary stimulus without stoking inflation.  This article in Bloomberg addresses this issue.

Howard Marks’ Reasons For Investing In High Yield Bonds–  Howard Marks is the founder of Oaktree Capital Management and has many years experience investing in bonds.  In this article he addresses the question of whether or not high yield bonds are in a bubble.

Jeffrey Gundlach Believes Fed Quantitative Easing Is Permanent– If you’re trying to assess the Federal Reserve’s so-called exit strategy from quantitative easing, then you’re asking the wrong question, according to Doubleline’s Jeffrey Gundlach.  Quantitative easing is a permanent policy tool, he said, and investors should be asking what that means for their investment strategy.

We hope you enjoy reading these articles along with us and that you find them informative.  Please forward this to your friends and family.

John R. Day, Bill Ennis and Stephanie Davidson


Disclosure – The articles mentioned in Mid Week with Day & Ennis are for information and educational purposes only. They represent a sample of the numerous articles that the firm reads each week to stay current on financial and economic topics. The articles are linked to websites separate from the Day & Ennis website. The opinions expressed in these articles are the opinions of the author and not Day & Ennis. This is not an offer to buy or sell any security. Day & Ennis is under no obligation to update any of the information in these articles. We cannot attest to the accuracy of the data in the articles.