Private equity funds continue to attract interest, despite rising deal valuations and high levels of leverage. We think there’s a way to get many of the benefits of private equity in public markets—without forfeiting liquidity.
Every quarter we ask bond and currency managers to consider valuations, expectations and outlooks for the coming months. Today, we’ve put the spotlight on U.S. rates and inflation expectations, credit markets and casualties from rising U.S. interest rates.
US interest rates have defied market expectations in recent years, staying historically low despite solid economic growth. But in the last year, and especially the last few months, rates have started to climb.
The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset.
The team illustrates the economic background behind the Korean summit meeting and profiles corporate debt.
The hallmark of an economic Ponzi scheme is that the operation of the economy relies on the constant creation of low-grade debt in order to finance consumption and income shortfalls among some members of the economy, using the massive surpluses earned by other members of the economy. The factors most responsible for today’s lopsided prosperity are exactly the seeds from which the next crisis will spring.
Volatility has had little effect on the long-term performance of equities, and in fact often creates opportunity.
The current expansion is the second longest recorded, after the '90s boom. And stock market valuations remain full. So we will constantly monitor our overall market risk tools in an attempt to time the end of the bull market. Meanwhile, since alerts have not yet triggered, we will continue to hold shares, and buy others, as long as they’re trading below our FMV estimates. We will worry top down but invest bottom up, buying well managed, appropriately leveraged, high quality enterprises with ever-growing earnings, at discounts to our estimates of their intrinsic value.
Arthur, I heard you're retiring from AEI after a spectacular run. Congratulations and best wishes in your future endeavors. However, in reading an "exit interview" with you, by Tim Alberta of Politico Magazine, I stumbled across what I believe to be a very important and dangerous blind spot in your thinking.
High-yield investors bracing for a downturn in 2018 can relax. By some metrics, high-yield companies have rarely looked better. The way we see it, investors who do their homework can still profit in this environment.