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Investment Research Since 1978

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“Some Parts of Private Equity Look like a Ponzi Scheme”

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In a recent presentation, Vincent Mortier, chief investment officer of Amundi Asset Management, raised the alarm over certain parts of the private equity market, calling them a Ponzi scheme. Katie Martin reports for the Financial Times: Europe’s largest asset manager has likened parts of the private equity industry to a “Ponzi scheme” that will face a reckoning in the coming years. “Some parts of private equity look like a pyramid scheme in a way,” Amundi Asset Management’s chief investment officer Vincent Mortier said in a presentation on Wednesday. “You know you can sell [assets] to … [Read more...]

Corporate Bond Yields: What You Can Earn Today

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Corporate bonds are a good place to pick up yield in the bond market. With yields on government bonds in much of Europe and Japan in negative territory, corporate bonds offer a higher-yielding alternative. Corporate bonds are a broad universe, though. There are investment-grade corporate bonds, junk bonds, foreign corporate bonds, hybrid corporate bonds, and floating-rate corporate bonds among other variations. Investment-grade corporate bonds are the largest part of the corporate bond market. How Much Do Corporate Bonds Yield Today? We break the investment-grade corporate bond … [Read more...]

A Private Equity Warning

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In the Financial Times, Mohamed El-Erian explains the lagged reporting process of private equity investments, and how that may reveal an unhappy surprise for investors who currently feel isolated from market turmoil. He writes: Such optimism about the robustness of the asset class may, however, be excessive. Private equity valuations are updated much less regularly than for public investments. Indeed, historically, revaluations have tended to lag behind public markets by a minimum of six to nine months. Moreover, several of the factors that have recently undermined the public markets are also … [Read more...]

Junk Bond Yields

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What do junk bonds yield today? The table below lists the yield of the Merrill Lynch junk bond index (High-Yield index), as well as the latest SEC yield on some of the top junk bond (high-yield) dedicated funds. A note of caution when you are looking at yields on junk bond funds; Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch junk bond indices. Junk Bond DescriptionSymbol Yield 3.31.225.31.22Merrill Lynch U.S. High-Yield Indexn.a.6.13%naVanguard High-Yield … [Read more...]

Ginnie Mae (GNMA) Bond Yields

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What do Ginnie Mae (GNMA) bonds yield? The table below lists the yields on two of the major Ginnie Mae (GNMA) indices as well as the latest SEC yield on some of the top Ginnie Mae (GNMA) dedicated funds. A note of caution when you are looking at yields on Ginnie Mae funds. Like all SEC yields, these yields are based on the last 30-days of income generated by the fund. They are not directly comparable to the yields on the Merrill Lynch and Barclay’s Ginnie Mae (GNMA) indices. Description Symbol Yield as of 3/31/2022 Yield as of 5/27/2022 Merrill Lynch Ginnie Mae … [Read more...]

China Builds an Anti-Quad Coalition

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China is not happy with the United States and its ever-closer ties with Australia, Japan, and India. The four countries are deepening the ties between them formalized in a group known as the Quad. The Quad's mission, as seen by China, is to deter Chinese progress in the region. Kathrin Hille reports for the Financial Times: Beijing could not have made its displeasure with Joe Biden any clearer. As the US president met leaders of the Quad security grouping in Tokyo, Chinese and Russian nuclear bombers flew over the Sea of Japan. But China is also employing less crude tactics to counter the … [Read more...]

There Are Tech Companies “Still Dreaming of Boundless Growth”

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Lately, the prices of many tech stocks have fallen dramatically, but while some tech companies have admitted that there are problems in their businesses, some are, as Laura Forman reports in The Wall Street Journal, "still dreaming of boundless growth." She writes: The biggest stories in tech recently have been of reckonings. Netflix said last month that it would introduce ads—something Co-Chief Executive Officer Reed Hastings has long eschewed and even referred to as a form of exploitation. The once aspirational Peloton Interactive ousted its founder, lowered the price of its hardware and … [Read more...]

How Can the Fed Prevent Stagflation?

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In the Financial Times, economics commentator Martin Wolf suggests "the Fed must act now to ward off the threat of stagflation." He writes: Is there going to be a recession in the US and other leading economies? This question has naturally arisen among participants at this year’s meeting of the World Economic Forum in Davos. This is, however, the wrong question, at least for the US. The right one is whether we are moving into a new era of higher inflation and weak growth, similar to the stagflation of the 1970s. If so, what might this mean? The similarities are evident between the present … [Read more...]

Now You Can Own Your Vacation and It Doesn’t Have to Be a Time Share

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Hotel owners have created a secondary market for hotel rooms using nonfungible tokens (NFTs). The system allows hotel guests who have paid for their rooms to sell the rights to their rooms on the open market if they don't want to use them. The system protects the hotel from cancellations and gives more people access to rooms that can be discounted on the secondary market. Peter Grant reports for The Wall Street Journal: Some resort owners think they have found a way to avoid getting stuck with excess inventory when guests cancel at the last minute. It involves converting room nights for … [Read more...]

Big Banks Adopting Blockchain for Short-Term Trading

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Big banks BNP Paribas and JPMorgan are using digital tokens in their short-term trading operations. Eva Szalay reports for the Financial Times: JPMorgan’s blockchain allow banks to lend out US government bonds for a few hours as collateral, without the bonds leaving their balance sheets. Post-crisis regulatory requirements demand that banks hold large amounts of liquid assets — which can be bought and sold easily even during times of market stress — such as Treasuries as a safety buffer. By tokenising these assets banks can temporarily turn them into collateral for a few hours, but without … [Read more...]