But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
The global growth slowdown: Must-know points for investors
Investors should be positioned for a slow growth environment, not another recession, and should consider raising allocations to assets that can still do well amid meager growth.
In addition, many market watchers are concerned about slowing growth in the Eurozone. While the region is unlikely to boom anytime soon, there are some signs that any further slowdown there should be modest.
Despite the recent global growth scare, a relatively strong U.S. economy continues to suggest that the Federal Reserve (or Fed) will tighten monetary policy sometime in the first half of 2015.
Though growth in most of the developed world, as well as in China, does appear to be decelerating, there are a few bright spots, including India and the United States.
The International Monetary Fund (or IMF), for instance, reduced its estimates for global growth, and many investors are now worried that another global recession could be on the horizon.
Italy’s ten-year government bonds spread against Italy’s ultra-safe German counterpart closed at 176 basis points on October 16. Yields on ten-year Italian bonds reached as high as 2.71% that day and closed at 2.58%.
After four years under a rescue program by the IMF, the EU, and ECB, Athens has largely repaired its finances.
While much of Europe is stuck in stagnation, François Hollande, the president of France, commented, “We are not doing reforms to please” but “because it is in our interest,” on Friday, October 17.
While the ECB is advising governments to spend more where possible under EU (European Union) rules, Germany wants governments to focus on reducing deficits.
In June, the ECB (European Central Bank) launched the TLRTO (Targeted Long-Term Refinancing Operation), which has a built-in incentive mechanism to encourage loans to firms.
Let’s now look at the issues that Draghi and his strategy currently face in Europe. Draghi’s strategy remains a big challenge for members of the EU (European Union).
Europe has more than one problem. Growth in the Eurozone stalled in the second quarter, following four quarters of sluggish recovery from a crisis over high government debt.
There were four collateralized loan obligation (or CLO) deals priced in the week ending October 10. Issuance volumes came in at $2.3 billion.
There were two refinancing transactions in the week. One transaction was by Metaldyne Performance Group. The second transaction was by Toys “R” Us.
Leveraged loans are commercial loans provided by a group of lenders. The loan is usually secured. It’s structured, arranged, and administered by investment and commercial banks.
High market volatility usually increases risk perceptions for junk bonds (PHB). This increases spreads and yields. As a result, bond prices decrease.
Yields on high-yield debt (JNK) increased last week. Yields increased by 21 basis points, or 0.21%, over the week. They came in at 6.32% on October 10.
For the week ending October 10, ~42% of the week’s volumes came in through a $5.1 billion bond sale by Dynegy Inc. (or DYN).
Corporate bonds tend to be thinly traded. It’s difficult for investors to find current yields and pricing data based on secondary market transactions.
“Helicopter Ben” and his pals Since the infamous crash of Lehman Brothers on September 15, 2008, and the subsequent onset of government stimulus in December, the global financial markets have…