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.
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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.
S&P 500 Earnings: Gazing Across the Abyss
The collapse in S&P earnings over the past year and the range of future possible earnings estimates create high uncertainty around U.S. equity valuations.
Distressed Investing
The financial and economic crisis continues to create a broad and deep range of investment opportunities, many of which remain attractively valued, even after taking the recent rally into account. Given the risk that cheap assets will end up worthless, we emphasize the importance of careful manager selection across the board. Further, we caution that…
Can Municipal Bonds Get Up From the Canvas?
Muni bondholders were left in the cold in 2008 as liquidity premia soared and Treasury bonds became hot properties. Issuers are making their case in Washington for federal backing of their securities, but we believe defaults among upper-tier muni credits should remain low regardless.
The Trouble With Treasuries
With U.S. Treasury yields at their lowest levels in over 50 years, the effectiveness of Treasuries as a “deflation hedge” has been greatly diminished. While the current environment still demands that investors maintain deflation protection, investors should take advantage of the recent rally in Treasuries to rebalance allocations back to target and actively seek to…
Taking the Measure of Continuing Credit Market Stresses
Short-term borrowing spreads, corporate issuance, and implied volatility have improved, but remain at stressed levels.
Who Will Be First Out of the Bunker?
Attractive opportunities abound (in equities and especially in credit), but the pervasive economic gloom will get worse before it gets better. Download PDF