Capturing Value in Lower-Rated U.S. High Yield
When evaluating allocations in the current late-cycle environment, the U.S. high yield market remains vastly bifurcated with overvalued BB-rated issues and some deeply discounted weak B- and CCC-rated names. Granted, there are risks to overweighting the lower-quality portion of the market, but given our base case for a prolonged credit cycle, the larger risk to performance could be maintaining overweights to the BB-rated segment of the market, particularly as lower-quality credit spreads imply a far higher default rate than we expect in 2020.
With Brexit All-But Done, Now Comes the Hard Part
The Conservative party’s sweeping victory in the December 13th general election was a landmark event on several fronts. Now, barring the unforeseen, the UK will leave the European Union on January 31, 2020 based on the deal that Prime Minister Johnson previously reached with the EU.
Neither Hawk Nor Dove: The ECB’s Lagarde Suggests the Wisdom of an Owl
After presiding over her first Governing Council (GC) meeting, ECB President Christine Lagarde successfully held the policy line, thereby forestalling speculation that the ECB may quickly engage in further easing. At the same time, she carved out flexibility under the upcoming strategic review, outlining its broad scope while appropriately refraining from taking any views on its potential findings, thus avoiding hints about potential policy changes and cementing the status quo, at least for now.
When Social Contracts Fail: The Economic and Investment Implications of Social Protests
Throughout various corners of the world, signs of social unrest are surging in both the streets and the ballot boxes. In an attempt to understand the extent to which these developments could affect the economic outlook of the countries involved and to identify fundamental changes in alpha-generating opportunities, this paper begins by establishing a few common characteristics of the protests. It follows with a brief rundown of some of the most talked-about episodes as well as a discussion on the respective macroeconomic and investment implications.