Zero Hedge Watch

Rick Rieder, the CIO of BlackRock's fixed income division has expressed worries in an interview with Bloomberg TV saying that the Fed's current policies were distorting the market. He said QE's too big. You've got to taper down QE. It's created this tremendous distortion in interest rates. This was leading to a mispricing of equities making them look cheap at the moment. However, he said people don't spend any time looking at cash-flow discounted by cost of financing, which is really where we think equity should be valued. Therefore, a spike in financing costs could weigh on stocks, which is a distinct possibility in this unusual environment where fixed income markets have actually recorded even higher volatility than equity markets. (VIEW LINK)


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