Newsclips
What We’re Reading
April 26, 2018
Today's topics include the ECB, risk-on/risk-off, testing the Federal Reserve's resolve, trade wars, yields and the yuan, capital requirements, ETF concerns and U.S. crude oil exports.
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Cartoons
April 26, 2018
Conference Calls
Conference Call Replay – Regime Shifts Are Not Pretty
April 25, 2018
A replay of our April 26, 2018 conference call
Conference Calls
Reviewing The Regime Change
April 25, 2018
In his inaugural edition of a new column, Jim discusses the regime shift in interest rates. The bond market is now focused on inflation rather than financial stability. Understanding this will prove vital as central banks embark on quantitative tightening in the years to come.
Conference Calls
Optimism Everywhere
April 25, 2018
Optimism Everywhere How This Optimism Manifests Itself Biases In The Surveys How the Biases Show Up
Conference Calls
Have Surveys Become False Prophets?
April 25, 2018
Financial markets are unfortunately suffering from a circular reference due to group-think and herd mentality. We use the information and ideas from 'the group' as a heuristic to form our own opinions. The world has become exponentially more complicated and inter-connected, therefore to remain functional we allow the crowd to help us make decisions. Unfortunately, positioning in financial markets become polarized and surveys of the economy are of waning utility.
Conference Calls
Concerted Global Growth is Over, Now What?!
April 25, 2018
We are not getting excited about U.S. 10-year yields hitting 3.0%. Slowing economic growth will likely keep sovereign yields from racing higher, even if inflation begins to percolate. Concerted global economic growth has ended with data changes detaching and the percentage of economies producing above-average growth nearing a drop below 60%. Defensive sectors and municipal bonds top our list of attractive investments.
Conference Calls
How It Comes Together – Central Banks
April 25, 2018
We estimate the reversal rate (or neutral rate) by stress testing lending growth and financial leverage with changes in the fed funds target rate. The rate leading to greater than 50% probability of causing a contraction in lending growth and financial leverage is marked the reversal rate, which currently resides near 140 bps (see… Continue reading How It Comes Together – Central Banks
Newsclips
Dollar Strength Trips Up Emerging Market Carry Trades
April 25, 2018
Dollar strength and rising Treasury yields are pressuring emerging market currencies tied to the carry trade. A unique advantage amid rising China / U.S. trade tensions and superior regional growth favor Brazil and Latin American over southeast Asian emerging markets.
Newsclips
Credit Markets Need to Acknowledge the Zombie Infestation
April 25, 2018
We are back to inflation being THE latent factor impacting nearly all asset classes. A continued march higher in inflation causing belief by long-end U.S. Treasury investors would produce a very unfavorable scenario for zombie companies and the numerous investment grade companies on the bubble. High yield has yet to reflect much of these risks, but we would not be surprised they begin surfacing assuming U.S. 10-year yields march higher above 3.0% on the heels of higher inflation.
Newsclips
High Yield Finally Ready to Awake from its Slumber?
April 25, 2018
Over the past week we provided numerous research posts suggesting U.S. high yield OAS are primed to widen. Here's why: 1) Concerted global economic growth has ended, led by Eurozone weakness, 2) High yield's negative correlation to the U.S. treasury yield curve is expected to snap toward positive like equities, 3) Cyclicals are beginning to under-perform non-cyclical, defensive sectors, and 4) Higher U.S. treasury yields put pressure on so-called zombie companies (14% of S&P 1500).
Newsclips
What We’re Reading
April 25, 2018
Today's topics include equity bears, company valuations, Jeff Gundlach, the strong U.S. housing market, the dollar, market manipulation, oil companies, investing in the emerging markets and credit funds.