Charlie Callan.

Click here for a print friendly version. This report was originally published for clients on 14 November 2023. Watching grass grow Economies are large and slow moving. Like a supertanker, the enormous mass creates inertia, even at slow speeds, which makes changing course torturously slow. This has been forgotten due to the recency bias of the economics of sudden stops [...]

Click here for a print friendly version. What do cheese and hybrids have in common? There are many varieties of cheese. Some cheeses have holes in them, some do not. There are also many varieties of hybrids, some of these also have holes in them, as Credit Suisse noteholders have found out. We draw this analogy out further below, inspecting [...]

Click here for a print friendly version. Walking the Talk Amid one of the worst years for bonds on record, BondAdviser’s desk provided a 66% win/loss ratio for holding period returns on our Conviction recommendations. Furthermore, we averaged an internal rate of return (IRR) of 10.5% (2021: 8.8%) on our Buy (n=45) recommendations across our coverage Universe. In total for [...]

Many can recall the famous words of Paul Keating (PJK) in 1990 and cold comfort were they to households at the time. The RBA yesterday provided a parallel of icy resolve, this time to financial markets – with the implication being the same: crush inflation by inducing a recession. Rates – PJK: “Because mate, I wanna do you slowly” 1 [...]

The docile bond market of the past 20+ years is gone. Whilst many professional managers, allocators and advisors have been burned this past year, we expected underperformance but are now in the process of capitalising on higher yields. Whilst risks to rates and credit spreads remain, the possibility of moving up the capital structure (i.e. lower risk) to get a near equivalent income return (i.e. [...]

Many in markets are aware the US Treasury yield curve is inverting. This means yields at the short-end are higher than the long-end. Historically this has been bad for banks (they borrow short and lend long) and economic sentiment more generally. Further discussion is tacked onto the inversion, with regard to correlation and causation. In other words, just because there [...]