Alex Berenson Bonds Quotations

To finance deficits, the government must sell bonds to investors, competing for capital that could otherwise be used to invest in stocks or corporate bonds. Government borrowings raise long-term interest rates, stifling economic growth.

Fannie Mae is owned by shareholders but operates under a federal charter that exempts it from paying state or local taxes. As a result, many professional investors think the government would repay the debt that Fannie Mae had issued if the company could not, although Fannie Mae explicitly says that its bonds do not carry a federal guarantee.

Lower interest rates are usually considered good for stocks because they lower the cost of borrowing and make bonds a less attractive alternative investment.

Rising interest rates are considered bad for stocks because they raise the cost of doing business and depress corporate earnings and because higher yields make bonds relatively more attractive than stocks to investors.