The State of State Finances
Deteriorating municipal finances have implications for investors though default risk is remote. However, there are technical drivers that may support the tax-exempt market for some time.
US
U.S. Dollar: The Cyclical Versus the Secular
Cyclical factors appear to be dollar supportive against other major developed markets currencies, while secular fundamentals argue for continued U.S. dollar weakness against emerging markets currencies.
Awaiting Confirmation from Fundamentals
The year 2010 will likely be a challenging one given the high expectations reflected in current market prices, uncertainties surrounding the economy and government policy, and the absence of clear signs of sustainable economic strength.
Amid Surging Supply of U.S. Treasuries, Can Demand Hold Up?
Thus far, record issuance of U.S. Treasuries has been absorbed by a changing mix of buyers, with increased domestic participation. Treasury buyers should tread carefully in 2010, maintaining deflationary hedges while considering the potential impact of the changing supply/demand dynamics.
U.S. Venture Capital: Good, Bad … or Ugly?
Given the numerous headwinds facing the U.S. venture industry, at the moment we believe venture capital makes sense only for the small subset of investors fortunate enough to have access to select high-quality managers running appropriately sized funds.
What Happens When the Fed Becomes Sated?
Fed purchases of more than $1 trillion in government-related securities in 2009 have dominated the market, but a first quarter halt to these purchases may pressure prices.
High-Yield Bonds No Longer Compelling
Investors that favored high-yield bonds over equities have fared well over the past year, but further upside may be limited.
Living on Borrowed Time – Dissecting the Current Equity Market Rally
The powerful move in equities from their March lows has outpaced fundamentals. History indicates that at this point in the cycle the easy gains have been made and returns going forward will likely be muted.
Uncharted Waters – The U.S. Policy Response to the Financial and Economic Crisis
The U.S. government’s policies to combat the financial and economic crisis appear to have been much more effective in bolstering the financial system and revitalizing capital markets than in stimulating the economy, but capital markets remain fragile and the policies have introduced a number of serious investment-related risks.
Distressed Corporate Credit From an After-Tax Perspective
High-yield bonds and loans are normally unattractive to taxable investors, but current conditions are more favorable than usual, and careful manager selection may tip the balance in investors’ favor.