SLIDE 1
Company Neutron Legislation - Late 1980s It was OK to lend money - - PowerPoint PPT Presentation
Company Neutron Legislation - Late 1980s It was OK to lend money - - PowerPoint PPT Presentation
Company Neutron Legislation - Late 1980s It was OK to lend money to build a building, but it wasnt OK to lend money to any company that would hire a person to work in the building. Examples of Regulation Following Volatility
SLIDE 2
SLIDE 3
1780s Weak state currencies Constitution/Commerce Clause 1830s-1850s Wildcat state banking National currency/Banking acts 1893 Stock market panic Bankruptcy Act 1907 Run on trust companies Federal Reserve Act 1929-1933 Market crash Securities & Exchange Act 1930-1933 Bank failures Glass-Steagall Act, FDIC, New Deal 1970s Commodities speculation CFTC 1970-90s Employment insecurity ERISA, COBRA, HIPAA 1987 S&L Crisis FIRREA 2002 Dot.com/Enron/etc. Sarbanes-Oxley 2008 Great Recession Dodd-Frank
Period
Examples of Regulation Following Volatility
Volatility Regulation
SLIDE 4
Pages in the Code of Federal Regulations
60,000 80,000 100,000 120,000 140,000 160,000 180,000 1975 1983 1991 1999 2007 2015
Source: Georg Washington University Regulatory Studies Center, 2015.
SLIDE 5
More than 2,000 pages… 6 pages … longer than the Torah, Bible and Quran COMBINED!
Regulation Complexity
SLIDE 6
Sources: Bank of America; Merrill Lynch, March 23, 2012
- 10%
0% 10% 20% 30% 40% 50% 1982 1983 1984 1985 1986 1987 1988 1989 1990
High-Yield Annual Returns 1982 - 1990
SLIDE 7
Sources: Bank of America; Merrill Lynch, March 23, 2012
High-Yield Annual Returns
11/29/1990: comment in The Wall Street Journal: “Mr. Milken’s central tenet – that a portfolio
- f junk bonds will generate yields superior to
a portfolio of investment-grade debt – may yet prove a fallacy of the’80s, however accurate his proposition may have been in
- ther periods.”
SLIDE 8
Sources: Bloomberg and Merrill Lynch
- 10%
0% 10% 20% 30% 40% 50% 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991
High-Yield Annual Returns 1982 - 1991
46.3%
SLIDE 9
Percent
- 40
- 20
20 40 60 2004 2006 2008 2010 2012 2014 2016 2018*
High-Yield Annual Returns 2004 - 2018
Note: Return for 2018 as of August 20, 2018. Sources: Bloomberg (8/21/2018).
SLIDE 10
200 400 600 800 1,000 1,200
1987 1992 1997 2002 2007 2012 2018
Index, December 1987 = 100
High Yield Treasuries Inflation
High-Yield Bonds vs. Inflation and Treasuries
Note: BofA Merrill Lynch High Yield Master II, BofA Merrill Lynch Treasury Master, CPI. Sources: Thomson Reuters (8/21/2018).
SLIDE 11
Source: Thomson Reuters (8/21/2018).
Central Bank Target Interest Rates Begin to Rise
- 1
1 2 3 4 5 6 7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Percent
U.S. Federal Reserve Bank of England Bank of Japan European Central Bank
SLIDE 12
Central Bank Assets
3 6 9 12 15 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 US$ trillions
European Central Bank U.S. Federal Reserve Bank of Japan Bank of England
Source: Thomson Reuter (6/25/2018).