Jay Powell was renominated to a second term at the Federal Reserve (“Fed”) and yet it seems there is new sheriff in town. Powell seems to have quickly changed his tone on inflation, maybe not-so-coincidentally right after meeting with President Biden.
Last week the Federal Reserve officially announced what we already assumed; their desire to stoke inflation over 2%.
The Federal Reserve shocked markets on March 23rd when it announced extraordinary measures to ensure liquidity flows throughout financial markets.
As the economy slowly begins to emerge from the pandemic, investors may naturally have concerns regarding the long term economic impact.
After a share price surge, Hertz Corporation petitioned for and initially received bankruptcy court approval to raise money via a common stock offering. This was a surprising turn of events for a company that recently filed for Chapter 11 protection.
Small value equities are valued -38% below their 10-year average, while growth, defensive, low volatility, and ESG factors exceed the bubble threshold of +30%. This dispersion has reached a 20-year high, in line with the dot-com bubble.
April 30th will see record fallen angel bonds move out of investment grade indices, more than the entirety of 2009. In response, the Fed has expanded its credit facilities to purchase fallen angels and HY ETFs.
Short duration BB-B bonds continue to exhibit top ranked risk-return. To illustrate the extent of this anomaly, we’ve compared the ICE BofA BB-B 1-3Y index to every market index within the Morningstar Direct database.
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