TURNKEY SOLUTIONS FOR WEALTH MANAGER AND FUND MANAGER
The Chinese government’s direct interference be it in on education stocks, be it on tech stocks or IPOs (ANT IPO) is a demonstration of power by the authorities and that they are serious about their goals. For now, the recent rout in Chinese equities and Asian high yield bonds may seem like a local issue, […]
Opportunities in Asian high yield bonds Read More »
The option adjusted spread (OAS) over US Treasuries for B rated US high yield bonds has recently hit its major historical resistance level of 290bps (currently 341bps). In other words, the credit risk premium has shrunk to a level where extra bond returns from spread compression has become very limited. While we recommend a cautious
Credit risk premium at major resistance level Read More »
Within the S&P 500 index, the technology sector makes up 27% of the index, reached a price/sales ratio of 7.5x and has become more expensive than it ever was during the dot-com era. Valuations are extreme but in the current momentum driven market environment IT stocks can continue to overshoot. True, headwinds are building up
High expectations for US tech stocks Read More »
The Bank of America’s most recent Global Fund Manager Survey shows that the biggest perceived market tail risks are in inflation (29%) and a “taper tantrum” (26%). On sector level the survey shows that fund managers have the highest overweight in the IT sector, although technology stocks are perceived as the most crowded trade. The
Biggest perceived market tail risks Read More »
CLOs (collateralized loan obligations) have always offered an attractive premium to bond or loan spreads, but investors continue to overlook the asset class due to their complexity and as they tend to be less liquid during market stress periods. However, a rational investor should take advantage of this relative yield advantage as double BB rated
CLOs offer an attractive premium Read More »
Governments and central banks around the world remain committed to generous fiscal stimulus measures and keeping the cost of capital at historic lows. This combination is about to initiate a new investment cycle as companies have the cash to add new capacity. Hence, Oxford Economics, a consultancy, argues that “the time looks right for a
Catalysts needed to keep equity rally Read More »
The Global Composite PMI has reached a 15-year high of 58.4 and after a decade of worries about inadequate demand and spending power in the aftermath of the global financial crisis, the shortage of supply for various products has become a fact. This can be seen from the cost to ship goods from Shanghai to
The Global Composite PMI at a 15-year high Read More »
Economies typically normalize again after bust/boom periods with inflation at marginally higher levels. The US is about to reach peak GDP growth levels, due to unprecedented monetary and fiscal stimulus measures. While the real economy is about to play catch-up with the equity market, the equity market is much ahead and priced on “steroids”. Center
During 2020, 45% (USD 521 bn) of the loan market by par amount had received a rating downgrade from a total market size of USD 1.2 tn. However, the flood of corporate downgrades has ebbed down and has even started to reverse. As of Q1 2021, the number of upgrades in the S&P/LSTA Leveraged Loan
Loan Rating upgrades & downgrades Read More »
Year-over-year, the Barclays Global Corporate Investment Grade Bond index (Global Corp IG) has returned +8.3% (duration 7.2 / yield-to-worst 1.7%). The Sherman ratio is an interest rate risk measure and represents the yield per unit of duration. In other words, a Sherman ratio of 1 means that it would take a 100bps rise in interest
Sherman ratio -interest risk measure Read More »
