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Today, more than four years into the recovery, capital market opportunities are shifting, with conditions in credit sectors such as high-yield corporate debt becoming a bit less attractive. However, the current cycle has different characteristics that suggest investors should not abandon credit strategies just yet. Let’s consider the features of a typical cycle, such as
While rising bond yields are consistent with a strengthening economic recovery, they also prompt the concern among businesses and investors that higher interest expenses could become a drag on continued expansion. Rising rates signal stronger economy We take a relatively positive view of the possibility of rising rates, which are also a symptom of better
A lackluster U.S. economic recovery and declining consumer sentiment often get blamed for weak sales at restaurants. However, another important factor has emerged: Fewer women are working outside the home. Weaker consumer spending U.S. consumers continue to curb spending in the wake of the recession because they remain worried about losing their jobs in today’s
Unemployment continues to drop, but not because a lot of new jobs are being created, as many would hope. Instead, the unemployment rate is dropping primarily due to a declining labor participation rate. This remains a cause for concern for us because of what it could mean for inflation. The Fed, under Chairman Ben Bernanke,
Emerging markets are vulnerable to the marginal tightening of U.S. monetary policy, we believe, caused by the reduction in bond purchases by the Fed. In December, the Fed announced it would reduce its $85-billion-per-month bond-purchase program by $10 billion beginning in January. Although the Fed describes the reduction as less accommodation — rather than marginal
It can be challenging for a retail manufacturer to break into foreign markets, particularly when draconian import duties lead to price inflation and frustrate the growth of the retailer’s brand. Penetrating new geographies can be especially challenging for the luxury goods seller, as a key attraction for luxury consumers may involve where a product is
Tourists from China spent more money abroad in 2012 than tourists from any other country. At US$102 billion, Chinese international tourism eclipsed — by 20% — the total amount spent by either German or U.S. tourists. Only seven years earlier, China spent less than one-third of what these two countries spent on travel. As massive
In recent posts, we have approached the problem of the outlook for interest rates by outlining the questions that surround the potential growth rate of the U.S. economy. It is established that this rate is heavily influenced by conditions in the labor market. New workers are joining the labor force at a slower pace than
Despite the recovering economy, capital spending by U.S. businesses has yet to pick up in a meaningful way. Businesses still have record amounts of cash on their balance sheets, but rather than investing for future growth, many are choosing to return cash to shareholders, either in the form of dividends or stock buybacks. And investors