Chasing yield, it’s not just Japan anymore


CNBC on Tuesday, July 8, 2014: “Watch out for asset bubbles developing: Sternlicht.” I read this with some interest considering Starwood Capital’s AUM ($36B) and focus on real estate. “[…]  watch out for tail risk,” warned Barry Sternlicht, company chairman and CEO, who also said there is complacency risk among investors because there is such a dearth of yield.

Since there’s no yield … in corporates or governments — everything whether it’s farmland, timber — everything is yield proxies.

“Yield proxy” is an interesting term. I know all about “chasing yield”  having watched and invested in Japan for so long (remember the yen carry trade) and seen the shitty products that banks sell their customers (10yr JGB yield: 0.53%, see Bloomberg bond tables). What really caught my eye in this CNBC piece (originally in video) is this admission by Sternlicht: Continue reading