Interest rate maven and newsletter writer Jim Grant is interviewed by the WSJ this weekend.
A lot of it you’re likely to be familiar with, if you’ve read anything about him before.
He favours a return to the gold standard. He can’t understand why anyone is buying Treasuries at these ridiculously low yields, and he thinks the current global monetary regime, which places so much value in a single, faith-based currency (the dollar) won’t go on much longer.
So what does he think looks good?
“We are looking at a bunch of these big cap, astoundingly cheap American enterprises that are hiding in plain sight. Wal-Mart is one, J&J is another,” he says. Wal-Mart he describes as a mature business whose per-share earnings are those of a growth company, thanks to its massive share buy-backs.
“We can observe that the dividend yield [on many blue-chip U.S. companies] is a match for most points on the Treasury yield curve. But their managements are adaptive, unlike the inert Treasury bond that you buy for so-called safety.”
Bear in mind that he’s not alone on this. The cheapness of US blue caps has been a much talked about theme for a while now. Maybe eventually the market will be convinced.