Ellen Carr writing in the FT lists four reason why bonds should be actively managed. First, true indexation — that is, investing in all the securities in an index — is impossible in fixed income. It’s not just that the Agg contains more than 12,000 bond issues. It is also the challenges of trading corporate bonds privately between counterparties, or “over the counter”. The average corporate bond trades infrequently a month after issuance, resulting in potentially large spreads between bids and offers, a cost that the indices don’t incur. With that backdrop, it’s remarkable that the two … [Read more...]
Archives for October 2022
Regulators Investigating ESG Funds for “Greenwashing”
You have had a front-row seat on YourSurvivalGuy.com to the ESG investing trend, where you invest, and they win. Now, after years of money managers rebranding their high-fee funds as "ESG" to get in on the action, regulators are beginning to step in and investigate. Frances Schwartzkopff reports in Bloomberg: Asset managers have dramatically reduced the number of new ESG funds they’re rolling out, as a tougher regulatory environment makes it harder to make claims of environmental, social and governance investing. Reclassifications that add an ESG element to conventional funds are down 84% … [Read more...]
Wildfires Erase California’s Draconian Climate Change Efforts
Over the past twenty years, California has implemented numerous draconian restrictions to reduce its theoretical climate change footprint, but carbon emissions from recent wildfires in the state have entirely erased the business-killing efforts by the state. The Editorial Board of The Wall Street Journal reports: Two decades of greenhouse gas emission reductions in California went up in smoke in 2020—literally. So finds a new study on Golden State wildfire emissions that highlights the folly of Sacramento’s climate priorities. University of California researchers calculated that wildfire … [Read more...]
Hong Kong Markets Suffer Under Communist Rule
Markets in Hong Kong were hit when the latest Chinese Communist party congress left great uncertainty surrounding the future of business in the city. Hudson Locket and William Langley report for the Financial Times: Shares in Hong Kong dropped to their lowest level since the end of the global financial crisis as investors reacted to the city’s economic recovery plans and the 20th Chinese Communist party congress in Beijing, where President Xi Jinping is expected to secure a third term. The benchmark Hang Seng index fell as much as 3 per cent to its lowest level since May 2009, while the … [Read more...]
Could America’s Markets Melt Down Like the UK’s?
UK Prime Minister Liz Truss resigned today, largely in the wake of a market meltdown in UK bonds (gilts) that followed the unveiling of her government's tax and spending plan. You've read about the effects that plan had on markets and especially on UK pension funds here, here, and here. Now, analysts are considering whether or not a similar meltdown could happen in the United States. Jeanna Smialek, Jim Tankersley, and Joe Rennison report for the NY Times: The Bank of England had to swoop in to buy bonds and soothe markets after the British government released a fiscal spending plan that … [Read more...]
The End of Speculative Real Estate Development?
With interest rates rising fast, property developers may be taking a second look at their future plans for speculative development. Prologis, the world's largest logistics property developer, is slowing down its speculative investments. The Wall Street Journal's Liz Young and Sabela Ojea report: Prologis Inc. is pulling back on building new warehouses without tenants already signed on, as the world’s largest developer of logistics properties braces for a potential economic downturn. The shift away from what is known in the real-estate sector as speculative projects reflects “a more … [Read more...]
What Happened to Day Trading?
You may have noticed that your brother-in-law or college buddy hasn't been talking your ear off as much lately about the trades he's making in his online stock portfolio. He's not alone. Many retail day traders appear to be giving up on trading and instead going back to their normal jobs. The pursuit of fast wealth is waning. The Wall Street Journal's Peter Rudegeair reports: The pandemic day-trading boom has gone bust. A swooning stock market and high inflation have sapped individual investors’ enthusiasm for buying and selling stocks. That was on display in earnings reports and financial … [Read more...]
The Robots Are Taking the Jobs
In a world of scarce labor, companies are increasingly relying on robots to perform work that used to be done by humans. The Wall Street Journal's Christopher Mims reports: A new wave of robots is arriving—and, in a world short of workers, business leaders are more eager to welcome them than ever. A combination of hard-pressed employers, technological leaps and improved cost effectiveness has fueled a rapid expansion of the world’s robot army. A half-million industrial robots were installed globally last year, according to data released Thursday by the trade group International Federation … [Read more...]
France Working Hard to Recover from COVID Lockdowns
Good morning from Beaune. Your Survival Guy is on the last leg of a three-week research trip through Paris/Beaune. The word on the ground is that France is back in business, but it’s been a long pull through Covid. Now everyone’s trying to make up for the lost time. The service industry is still struggling to find workers and to balance the needs of workers who are burnt out. It is an Atlas Shrugged-like struggle between working and throwing in the towel and just not coming back to work. Sound familiar? Louis Jadot is always a good choice. Your Survival Guy … [Read more...]
China Real Estate Debt Snowballing into Record Defaults
According to Bloomberg News, over the past year, the Chinese real estate market has snowballed into record defaults and is worsening. Bloomberg reports: A worsening crisis in China’s property market is dragging junk dollar bonds from the nation’s borrowers deeper into distress, as the implosion of what was once one of the world’s most-profitable bond trades sends ripples across trading floors. Anyone who had been expecting a market turnaround from the 20th Communist Party congress which started Sunday has been left grappling with a further grind lower in China’s offshore credit market this … [Read more...]