Muni clients concerned about rising rates? See how staying the course vs. moving to cash stacks up ... [Read More]

Fixed income markets are currently weighing several potential peaks — peak growth, peak inflation (maybe) and peak policy support (likely)...See More

Worried about rising interest rates? These three strategies can help mitigate interest-rate risk. See More

Muni clients concerned about rising rates? See how staying the course vs. moving to cash stacks up. See More

Dalio is quick to remind everyone to avoid holding cash as inflation eats away at holdings, but he also recently provided stocks for investors looking to hedge. The first on the list is Global Payments which has sound fundamentals and sequential quarterly revenue gains and is a bright spot in a growing industry. The next was Levi Strauss and Company which shrugged off naysayers who believed supply constraints and bottlenecks would keep them from meeting demand. Finally, was Lithia Motors which is a large automotive group. Supply constraints have boosted used car prices and the industry’s bottom lines.

FINSUM: These are all unique picks that have their built in inflation benefits, particularly the automotive industry.

Throughout 2021 one of the biggest worries for investors, business owners, and policy makers has been the return of inflation…see the full story on our partner’s site

Evergrande’s crisis has been all over the news in the last month, but it appears there is contagion in the high yield debt market. The bond market sell off, particularly from off-shore investors has spread to companies like Tencent and financial companies like Bank of Communication Hong Kong. This has pushed the ICE BofA Asian Dollar High Yield Corporate China Issuers Index to over 25%, which is the peak yield for the index since 2008. Sparking the yield climb is a combination of regulation, high leverage, and low liquidity. A bump in liquidity from the Chinese central bank has calmed domestic investors, but ultimately government policy will have to lighten up for yields to start to fall.

FINSUM: The endless regulation is spilling into the rest of the economy in China, and no amount of liquidity provisions will bring back outside investors. Rather, China needs to loosen the grip if they want to give companies a chance at refinancing their debt moving forward.

Science and technology have only recently begun to disrupt the active fixed income asset management industry. Does scientific fixed income investing represent the industry’s next frontier? Learn more

Harbor believes it is important to look beyond common convention and cost when considering active versus index solutions within the U.S. large cap equity space. Read More

Strategists for Goldman Sachs, Christian Mueller Glissmann and Peter Openhiemer, say that government bonds are failing to meet the traditional hedging requirements and to consider higher cash and equity allocations. There is still a small negative equity/bond correlation and investors shouldn’t leave the traditional 60/40 split immediately. There are other reasons to allocate more to equity though such as a higher equity risk premia. Inflation is eating away very low yields, making cash a better relative investment, and rate volatility could be even higher in the upcoming Fed cycle. If bonds/equity correlation moves to zero then a balanced portfolio is futile and cash is the safer option.

FINSUM: Investors should need to watch the real return on their fixed income investments and high yield debt might not be worth the risk to generate the ‘normal’ bond returns.

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