Today’s economic environment and current yields and spreads make investment-grade bonds an asset class worthy of consideration, but this would be a tactical bet with potentially significant downside if the exit is poorly timed.
Market leadership shifted abruptly toward high-quality mega-cap stocks over October and November, yet despite the sharp recent improvement in relative valuations of small caps and value stocks, we still think it is too early to switch from a defensive high-quality portfolio in the current environment.
The default outlook for high-yield bonds is dreadful, but with more than two-in-three issues trading at distressed levels, today’s yields already price in depressionary conditions.
While the current sell-off is in line with previous major bear markets of the postwar period, it is extreme in its speed and volatility. Precedent would suggest that markets will remain under pressure for the immediate future, but unless you assume we are on the verge of a 1930s’ style bust, equities are poised for…
While many pundits expect the financial sector’s problems to remain “contained,” we not only expect the bear market to spread beyond financials, but believe the economic damage may be greater than that inflicted during the downturn of 2000–03.
Despite low valuations, U.S. financial stocks will likely remain a “value trap” until greater clarity emerges as to the ultimate magnitude of losses facing the financial system.
After years of supporting share prices and EPS growth with increasingly aggressive share-repurchase programs, companies are showing signs of buyback fatigue.
While the Fed is committed to a policy of reflation, market conditions pose significant obstacles to success and there are also serious inflationary risks associated with this policy.
Deleveraging, insurance woes, and liquidity concerns deliver pitfalls and opportunities to taxable investors.
A look at what history tells us to expect as the earnings, business, and stock market cycles converge.