Guggenheim Investments

Lower July CPI inflation is likely the beginning of a trend.

Scott Minerd, Chairman of Guggenheim Investments and Guggenheim Partners Global CIO joins Bloomberg TV on Fed Day to discuss the Fed’s 75 basis point hike, and signs that the economy is already in recession.

Managing Director Justin Takata discusses the technical and fundamental drivers of value in investment grade corporates, and U.S. Economist Matt Bush addresses recession timing and the possible progression of policy.

The latest data suggest that we may already be in a recession.

Brian Smedley, Guggenheim’s Chief Economist and Head of Macroeconomic and Investment Research, discusses the impact of the Fed’s 0.75% rate hike on markets and the economy.

The outlook for credit amid rising inflation, monetary tightening, and war in Europe.

Scott Minerd, Guggenheim Partners Global CIO, joins CNBC to share his views on the consequences of aggressive Federal Reserve tightening.

The risks of tightening into a downturn.

Get insight into the current macroeconomic environment and its implications for the markets in an insightful panel discussion featuring Maria Giraldo, Strategist and Matt Bush, Economist from Guggenheim Investments’ Macroeconomic and Investment Research Team. This informative session will explore how Guggenheim sees the inflation outlook, where Federal Reserve policy is heading, and how investors should be positioned in this environment. Thoughts on the crisis in Ukraine and outlook for a post pandemic environment will also be given.

A properly diversified credit portfolio should have exposure to both high-yield corporate bonds and bank loans.

The resurgent virus should keep a lid on Treasury Yields.

Falling demand will help limit the extent of more price increases.

The COVID Delta Variant’s Looming Threat to Risk Assets.

A revival of the Obama-era Build America Bonds would raise funds with less taxes.

June’s Consumer Price Index (CPI) again surprised to the upside, adding fuel to headline-writers’ panic about inflation spikes and market speculation that the Federal Reserve (Fed) will need to act soon to rein in prices.

Examining the Fed’s announcement to sell its SMCCF holdings.

The spike in core CPI is a one-time adjustment as the economy reopens.

Strong earnings growth, low default volumes, upward rating migration, and tighter spreads in the recovery phase of the credit cycle.

Supply chain disruptions may be a near-term challenge, but base effects will slow inflation next year.

Get insight into the current macroeconomic environment and its implications for markets. This informative session will explore why Guggenheim believes the markets’ inflation concerns are overdone, how the Fed’s new framework virtually ensures several years of rates at zero, why investors should own duration and why a strong economy also bodes well for credit. Thoughts on the opening year of the Biden administration and the continuing impact of the COVID-19 pandemic will also be given.

Despite a strong March 2021 jobs report, full employment remains far away.

The summer months tend to deliver stronger-than-average returns for bonds.

A Green New Deal should not be viewed as a big government program, but as an opportunity to reinvent vast swaths of the U.S. economy while pursuing the laudable goal of carbon neutrality

Fed Chair Jay Powell is giving conflicting guidance to bond investors.

Even as credit spreads have narrowed, further value remains.

Investors’ reach for yield puts downward pressure on 10-year Treasury rates, likely rendering the current yield unsustainable.

Our positive 2021 economic outlook, combined with better-than-expected company fundamentals, supports strong credit performance and spreads.

The relative calm we feel in the markets right now isn’t the end of the storm, it is just the eye.

Scott Minerd, Chairman of Investments and Global CIO, discussed his outlook for markets and the economy with CNBC’s Brian Sullivan during the Milken Institute 2020 Global Conference.

As a result of the Federal Reserve’s efforts to shore up credit markets, the leveraged credit sector has delivered stellar performance since the lows in March.

Among the many significant developments in the world that investors should be considering as part of their long-term thinking, one of the issues that concerns me the most is China.

The pandemic creates a good opportunity to make Social Security more sustainable.

The Fed has increasingly unorthodox policy options if the economy remains mired in a protracted downturn.

Scott Minerd, Chairman of Investments and Global CIO, and Mike Milken, Chairman of the Milken Institute, discuss at a Goal 17 Partners web event the government and private-sector response to COVID-19.

The support to corporate America during this economic shutdown risks the creation of a new moral obligation for the U.S. government.

The unintended consequences and moral hazard of insufficient and misdirected policies.

Global capital markets are not pricing in the growing likelihood of rising EM corporate defaults.

Allocating capital as the pandemic progresses; emerging markets may be next domino to fall.

The consequences of policymakers returning to the same tools employed in the financial crisis.

There are three key areas where the allocation requirements of passive fixed-income vehicles have an impact on the market.

We entered into the current crisis with a whole financial system that had been incentivized by policymakers to take on excessive levels of debt and leverage. The turmoil we are seeing right now is the result of the unwinding of this leverage.

Markets often overshoot, and just because things are cheap doesn’t mean they can’t get cheaper.

Without the right programs, this shortfall in credit availability will increase and it will further deepen the crisis.

The Fed still has a number of tools at its disposal that haven’t yet been implemented.

In this remarkable period in our history, we must renew our resolve to the commitment to always do that which is true and noble for all. Together, we can meet this historic challenge.

If I had written a commentary on how 4,000 people dying from the flu would topple global financial markets, I think I would have been deemed insane. Yet today that is exactly the story.

The cognitive dissonance in the credit market is stunning. I recently have had the feeling that I’m living peaceably in Britain during the 1930s while on the continent the Germans were building weapons, expanding their army and navy, and opportunistically grabbing land.

Ten charts illustrate the macroeconomic trends most likely to shape Fed policy and investment performance in 2020 and beyond.

Ultimately, investors will awaken to the rising tide of defaults and downgrades.

Why active has the potential to outperform passive in fixed income.

History shows that once our recession forecast model reaches current levels, aggressive policy can delay recession, but not avoid it.

History shows that once our recession forecast model reaches current levels, aggressive policy can delay recession, but not avoid it.

Credit spreads could get tighter in this liquidity-driven rally, but history has shown that the potential for widening from here is much greater.

The Macro Outlook webcast featuring Brian Smedley, Head of Macroeconomic and Investment Research, will analyze a wide range of economic and market data that can help advisors navigate through a possible turning point in the business cycle. The following timely questions will be addressed: Will the Fed’s dovish pivot extend the expansion? Can we trust the recessionary signal of an inverted yield curve, or is it distorted by QE? When will the next recession begin, and how severe will it be for the economy and for markets? How should investors position in this environment?

This webinar will cover:

• Analyzing recent economic and market developments in a historical context
• What Guggenheim’s Recession Dashboard says about the timing of the next recession
• What Guggenheim’s proprietary asset allocation models say about how to invest in this environment
• Top themes for investors to watch

The Fed’s cure might make the disease worse without fixing the problem.

High-yield corporate bond spreads and bank loan discount margins typically widen when the Fed is lowering interest rates.

During the course of the last two years, we have consistently indicated that the course for the U.S. economy, along with risk assets and rates, was contingent on the impact of any unexpected exogenous events, most likely from overseas.

Some believe we may have seen the Federal Reserve’s (Fed) last rate hike in this cycle, and that the next step from here will be a cut in rates as the economy loses momentum going into the first half of next year. I believe that view is plainly wrong.

Recession fears resurfaced at the end of 2018 as a combination of negative data surprises, communication blunders by the Fed, slowing growth overseas, and rising trade tensions triggered a selloff in risk assets that led many in the market to fear a recession was imminent.

Risk assets will likely enjoy another rally while the Fed stays on hold, but the pause will only allow excesses to become more pronounced.

Ten charts illustrate the macroeconomic trends most likely to shape Fed policy and investment performance in 2019 and beyond.

Should the mood this year at Davos prove once again to be a contra-indicator, this may be the signal that the economy is likely to re-accelerate soon and that the party in risk assets continues.

Ten charts illustrate the macroeconomic trends most likely to shape Fed policy and investment performance in 2019 and beyond.

An uptick in corporate defaults in 2019 will mark the beginning of a prolonged period of stress in the corporate bond market.

What would be a normal seasonal correction is turning into the worst December selloff in equities since the Great Depression.

Guggenheim Investments’ recently published Fourth Quarter 2018 Fixed-Income Outlook reflects its investment management team’s view that the risk of a sudden widening in spreads next year is rising and could shock fixed-income investors who fail to position defensively now. “The key here is to manage this shift in a timely manner,” said Scott Minerd, Global CIO and Chairman of Investments. “Call it a jog to exit credit and liquidity risk.”

Preparing for the market turbulence that typically occurs in the run up to a recession.

Our Recession Probability Model and Recession Dashboard continue to suggest a recession is likely to begin in early 2020. Investors ignore the yield curve’s signal at their peril.

With the Federal Reserve (Fed) now targeting 2.00–2.25 percent on fed funds, tightening monetary policy is putting increasing pressure on corporate borrowers’ balance sheets across the leveraged credit landscape. We estimate that about 30–50 percent of the increase in short-term borrowing costs to date has passed through to the cost of debt for leveraged credit, depending on sector, and we expect this passthrough to increase over the next 12 months as the Fed raises rates.

While the U.S. economy remains on solid footing, exogenous risks threaten asset values, market confidence, and the strength of the U.S. economy.

To achieve long-term prosperity, rational immigration policy must become a priority.

Investors should stay guarded for exogenous shocks that could pull the next recession forward and cause markets to reprice credit risk.

If you want to see who the real victims of tariffs are, go look in the mirror.

Shortening duration, maintaining an investment-grade portfolio, and generating attractive yields do not have to be competing investment objectives for core fixed-income investors.

After several quarters of low volatility, tight spreads, and abundant liquidity, financial conditions are shifting.

New developments in fiscal policy, the labor market, and the neutral interest rate suggest that the expansion could extend into the latter half of our recession range.

As the Federal Reserve (Fed) tightens monetary policy further, we expect to see default rates higher next year. Loan recovery rates averaged 70 percent between 1990 and 2017 as a result of their secured status and seniority in the capital structure. Senior secured bond recovery rates averaged 58 percent over the same period, while senior unsecured bond recovery rates averaged 43 percent. We are concerned about distressed exchanges as the risk of re-default is high. About 7 percent of high-yield corporate bond issuers have defaulted in the past.

The Western Pennsylvania of my youth was a magical place, with bucolic parklands and architectural gems like Frank Lloyd Wright’s Fallingwater. The decline of the steel industry over subsequent decades has left this beautiful countryside scarred with abandoned mills and rife with the toxins and refuse of a dying industry. This experience informs my perspective when I think about how to tackle the problem of funding the estimated $2.5 trillion gap in annual global infrastructure needs: How can future development avoid the mistakes of the past?

The business cycle is one of the most important drivers of investment performance. As the nearby chart shows, recessions lead to outsized moves across asset markets. It is therefore critical for investors to have a well-informed view on the business cycle so portfolio allocations can be adjusted accordingly.

Investors need to be vigilant, as stocks and bonds are expensive, volatility is low, and risks lay ahead.

After years of relying on monetary policy to stabilize the U.S. economy, policymakers have redoubled their commitment to stronger pro-growth fiscal policies. As post-election Washington sets its sights on growth-oriented reforms, policymakers should remember that economic growth in any nation is determined by the four basic factors of production—land, labor, capital, and entrepreneurship.

Longer-term bond yields are near their highs for this cycle, while the environment for riskier assets like high-yield bonds, bank loans and stocks remains positive.