Leveraged loan investors are heading for the door. Loans have their place in investment portfolios, but as late cycle assets to hold, these are not great. The Wall Street Journal's Sam Goldfarb calls them the "last domino to fall," in debt markets. He writes: While mutual funds represent just one source of demand for loans, the recent outflows have had a big market impact, leading to sharp declines in the prices of existing loans and prompting more investor-friendly terms on a shrinking supply of new loans entering the market. To some extent, loans—often referred to on Wall Street as … [Read more...]
McDonald’s Fights Overuse of Antibiotics in Beef
Deena Shanker writes for Bloomberg that McDonald's is fighting the overuse of antibiotics by implementing new guidelines for its beef suppliers. McDonald's is such a large buyer of beef, its new policies could affect the entire beef industry. Shanker writes: As consumers have grown increasingly concerned with how their food is made, they have demanded a number of changes, including antibiotic-free meat and poultry. Scientists say the overuse of antibiotics in agriculture is behind the growing global problem of antimicrobial resistance. The chain has been on a mission to clean up its … [Read more...]
A Safe Port in the Stock Market Storm
U.S. equity markets tumbled last week, with the S&P 500 down more than 4.5%, and the Russell 2000 index of small company stocks falling 5.50%. Both indices hit all time highs in late summer/early fall, but since then the ride has gotten rough. Since August 31st of this year, the Russell 2000 index is down almost 17% and the S&P 500 has fallen by about 9%. Young Research’s maximum safety Dynamic Maximizers® portfolio is up about 7 basis points over the same time period. The Dynamic Maximizers® portfolio has not experienced a down year this century, and we anticipate another up year … [Read more...]
The Global Bear Market
Outside of the United States, equity investors have had a rough year. Some of the world’s biggest equity markets have fallen into bear market territory including China, Germany, Korea, and Italy. The MSCI index of developed stock markets that excludes the United States is only a whisper away from bear market territory. The emerging markets index is already in a bear market, down more than 23% from its January high. And the United States? The S&P 500 remains up on the year. U.S. investors still seem to have the speculative bug that the rest of the world has avoided. The NYSE FANG+ … [Read more...]
Heavy Duty Truck Orders Slowdown
After months of record breaking growth, heavy duty truck orders have slowed down in November. The freight market is slowing down in tandem. Erica Phillips reports for The Wall Street Journal: Orders for heavy-duty trucks declined in November for the first time this year, falling to the lowest level in 14 months and providing a fresh sign the North American trucking market is cooling down. Trucking companies last month ordered 27,900 new Class 8 trucks, the heavy-duty rigs used on regional and long-haul routes, according to a preliminary estimate from industry data provider ACT Research. … [Read more...]
Are Catastrophe Bonds Worth the Risk?
Investors who purchased catastrophe bonds from PG&E now have the fate of their investments lying in the hands of investigators searching for the cause of the Camp Fire in California. If PG&E is found to be at fault for the fire, those investors are likely to lose everything. Markets will surely have to reevaluate the risk posed by such catastrophe bonds, and adjust yields demanded accordingly. Nicole Friedman reports on the bonds in The Wall Street Journal, writing: Those who follow the catastrophe-bond market are already anticipating the worst. The PG&E wildfire bond was quoted … [Read more...]
Kroger to Reach New Customers with Walgreens Partnership
In the race to reach new customers, mega-grocer Kroger has signed a partnership with Walgreens to embed mini grocery stores in the pharmacy chain's locations. Heather Haddon reports at The Wall Street Journal: Kroger and Walgreens executives wouldn’t say how the companies would share sales revenue or provide financial details of the deal. Kroger and Walgreens will supply and operate the Kroger-branded sections together, officials said. Kroger won’t sell store-brand items that compete with Walgreens’s private-label products, but it will take over its supply for branded goods, the companies … [Read more...]
House Prices are Also Prices
Inflation measures used to guide Fed policy should include housing prices. At The Financial Times, Alliance Bernstein Chief Economist Joseph Carson explains: The American economy has experienced many booms and busts in its history but, in the past two decades, the problems have been particularly acute in the asset markets. Both the 1990s dotcom equity bubble and the 2000s housing bubble saw large, persistent increases in asset prices. And each time, the economic tipping point came from sharp falls in asset prices and the abrupt changes in balance sheets on spending and investment … [Read more...]
Millennials Want to Spend like their Parents, but Can’t Afford It
Millennials are known in some circles as not wanting to spend any money on anything. They live with their parents, they buy brandless goods at cheaper prices, and many times they would prefer to take an Uber than buy a car of their own. But this characterization of Millennial spending habits may be misconstrued. New research from the Fed indicates that Millennials may have all the same desire to spend as their parents, but simply can't afford it. Bloomberg's Jeremy Herron and Luke Kawa report: Millennials, long presumed to have less interest in the nonstop consumption of goods that … [Read more...]
Facebook: Ethics for Sale?
Like many tech companies claiming to be ethical, or not evil, Facebook seems to condition that morality on whether or not it is getting paid enough to change course. During internal discussions reported on by The Wall Street Journal, Facebook executives and employees appear to have considered ways in which to generate greater profits that would have gone against the stated ethical philosophies of the social network company. It should be noted that Facebook didn't ultimately follow through on those unethical practices, but its seems that the line holding Facebook back from such betrayals of … [Read more...]
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