US banks have come a long way since the financial crisis, and that’s good news for fixed-income investors. We think better fundamentals and stricter regulations are creating a good formula for banks’ preferred securities. [Read More...]
US Housing Finance: Our Vision for a Privately Led System
There’s a growing consensus today that the US government’s huge footprint in the $10.5 trillion mortgage market needs to shrink, with the private sector taking the lead. But there is less agreement on how the transition to a new system should take place. Here’s our perspective as investors in the mortgage market on what is needed to get the ball rolling. [Read More...]
That’s So Overrated: How Credit Ratings Do Damage
Credit rating agencies are a capital-markets fixture; the ratings they assign to the debt of corporations and governments are widely used by investors as a standard measure of credit risk. But agency credit ratings aren’t perfect—and shouldn’t be a substitute for investors doing their own analysis. [Read More...]
Squawk: US equity averages threaten deeper corrections US equity averages have…
US equity averages threaten deeper corrections US equity averages have taken a lead on the downside this week with the previously more vulnerable European equity indices having taken global markets… [Read More...]
US Housing Finance: Let’s Put Quality Before Quantity
The US government’s housing finance policies in recent decades can be summarized by one simple phrase: quantity over quality. The implicit goal was to increase the quantity of housing finance by keeping mortgage rates low and promoting wider home ownership. For several decades, the system worked. But if we view the long-term stability of home prices as one measure of the quality of housing finance, those policies now don’t look so successful. [Read More...]
High-Yield Bonds: Are ETFs the Best Vehicle?
High-yield exchange-traded funds (ETFs) have been growing like gangbusters in recent months, despite continued weak performance relative to the indices that they track. While these instruments make sense for investors who make rapid, tactical trades into and out of the asset class, we think they’re a poor choice for those seeking to gain long-term exposure to high-yield bonds. Below, my colleagues Ashish Shah and Gershon Distenfeld explain why. [Read More...]