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Category Archives: Credit
Missing the Forest for the Trees
There is a tendency among market commentators to seize upon a data point and declare that hellfire and brimstone are about to come raining down. They blow things out of proportion. They see fire when they should be on the … Continue reading
Diversify When the Upside Is Limited
While having lunch with a client recently, I asked about his attitude towards risk. His half-joking response was that he would like high returns with no risk. I’ve heard similar sentiments echoed many times down the years. We all want … Continue reading
Posted in Credit, High Yield, Investing
Tagged Credit, Equities, Investing, Volatility
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Floating Interest, Not What You Think
A theme of the past several years has been the need to protect yourself from the bond market selloff, a selloff that seems to have arrived. The idea that you should protect against this has led to the suggestion that … Continue reading
Home Is For Your Heart, Not Your Portfolio
A number of years ago I took over a portfolio that held corporate bonds from both developed and emerging markets. As I looked through the holdings a name popped out at me, Ipiranga. I turned to my credit analyst and … Continue reading
Posted in Credit, Emerging Markets, Equities, Investing, Market Cycles
Tagged Credit, Equities, Investing, Market Cycles
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Mind the Curve
There is concern about the US treasury yield curve. It has flattened, meaning the difference between long term rates and short term rates has narrowed. Yields on the two maturities are a mere 35 hundredths of a point apart. Some … Continue reading
Posted in Central banks, Credit, Rates
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Chinese Debt for Equity Swaps, 3 Card Monte By Another Name?
The Chinese government is bandying about debt for equity swaps as a potential cure for the overhang of corporate debt in the middle kingdom. Much, if not most, of the bank loans in China have been made by government owned banks to … Continue reading
Posted in China, Credit, Emerging Markets, Equities
Tagged China, Credit, Emerging Markets, Equities
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Banking the Fire
The narrative of the current market downturn, bear market, correction or whatever you prefer to call it had been about oil, China and the emerging markets. Now the banks have been put into play. Year to date their decline has outstripped … Continue reading
Posted in Banks, China, Credit, Equities, Uncategorized
Tagged Banks, China, Credit, Equities
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Strategy and Structure
Strategy and Structure is a classic management book. It is about the evolution of structures suitable for managing large complex organizations. The book gets across the idea that form should fit function in organizational design. In asset management, it is the vehicle … Continue reading
Junk Bonds or Equities With Coupons?
“Equities with Coupons” is a cynical description of high yield bonds. The expression, like many of its kind, contains more than an element of truth. Usually it’s invoked when trying to illustrate the risk of owning bonds priced near par. You may collect … Continue reading
Can Bonds Tell Us Something About the Stock Market?
I was visiting with the head of fixed income at a large asset manager when I mentioned the subject of my last post, the deterioration of corporate credit in some sectors. He noted that Baa bond spreads had been rising for … Continue reading
