The credit market is giving us clues that things may be better than they seem for corporate balance sheets… either that or, it is drastically mispricing risk. We believe the former.
Last week the Federal Reserve officially announced what we already assumed; their desire to stoke inflation over 2%.
The Federal Reserve shocked markets on March 23rd when it announced extraordinary measures to ensure liquidity flows throughout financial markets.
As the economy slowly begins to emerge from the pandemic, investors may naturally have concerns regarding the long term economic impact.
After a share price surge, Hertz Corporation petitioned for and initially received bankruptcy court approval to raise money via a common stock offering. This was a surprising turn of events for a company that recently filed for Chapter 11 protection.
Small value equities are valued -38% below their 10-year average, while growth, defensive, low volatility, and ESG factors exceed the bubble threshold of +30%. This dispersion has reached a 20-year high, in line with the dot-com bubble.
April 30th will see record fallen angel bonds move out of investment grade indices, more than the entirety of 2009. In response, the Fed has expanded its credit facilities to purchase fallen angels and HY ETFs.
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