Credit Markets: What No One Is Talking About In August
Interest Rates Creep Higher in August Declining interest rates means rising bond prices. For more than two decades fixed income investors have benefited from a declining trend in interest rates. For the past several years that decline in rates has been driven primarily by Fed policy intervention in the form of economic stimulus. In fact since the fourth quarter of […]
Deja Vu All Over Again: Opportunities in Long-Short
I think it’s safe to assume that when Yogi Berra uttered his famous statement “It’s like Deja Vu all over again” he was not referring to the effects of fed intervention on financial markets. But he couldn’t have been more right. Over the last 3 years markets have been subjected to several rounds of Federal Bank intervention, all in an […]
Warning Signs from High Yield Credit and International Markets
It was just 90 days ago that we were commenting on the record levels of volatility and little progress investors had been subjected to in the second half of 2011. In our “Oh Trend…Where For Art Thou” comments published in December we stated: “Long periods of sideways volatility creates pent up frustration for investors. Once a trend emerges, the inevitable “missing the boat” mentality […]
Oh Trend..Where For Art Thou?
A Flat 200 Day Average for U.S. Equities The lack of a discernible trend can be seen in the 200 day moving average. The 200 day average is widely accepted as a good indication of longer term market trends, and is illustrated in the chart of the S&P 500 below. Notice the clear rising and falling slope, regardless of Bull […]
NOT So Lazy Summer Days
Anchor Capital’s Absolute Return strategies have remained hedged and/or net short during this decline, with several strategies positive on the month in the face of record declines. More on those records later. Here is a brief overview of current markets, and where we see opportunity. On Friday, August 5th 2011 Standard & Poor’s downgraded U.S. treasuries from AAA to AA. The […]
One of These Things is Not Like the Other
In short, while equities have benefited from the record amount of stimulus provided through the Fed’s Quantitative Easing program, corporate credit has not. As credit tends to be a better leading indicator of the economy then equities, this represents a significant warning sign. The chart below highlights the dramatic difference in how corporate credits responded to QE I compared to […]