The resulting performance
of risk asset markets clearly indicates to us that market participants are more than comfortable with the idea of a monetary - to - fiscal policy transition, and in fact, they actively seek it.
Various considerations offer caution about getting too short, including the potential resurgence
of risk asset volatility as market yields rise and / or as Washington events evolve — ranging from the Mueller investigation to trade tariffs.
It is notable that the WLI, which is sensitive to the prices
of risk assets that have been supported by massive worldwide liquidity injections, has hardly been swayed from its recessionary trajectory.
The assumption that you can create a portfolio
of risk assets that will have steady returns year in and year out is what causes so many problems for many professional and individual investors alike.
We see the economic expansion — and the outperformance
of risk assets — having more room to run.
But don't get out
of risk assets completely.
Volatility and correlations have been relatively low, but that creates some challenges in finding the right blend
of risk assets and stable diversification.
Broadening confidence that the synchronized global expansion — now juiced with U.S. fiscal stimulus — can persist has spurred an embrace
of risk assets globally.
We have a saying that «when the CBOE Volatility Index1 (VIX Index) is low it's time to go» — the VIX is often referred to as the fear index or fear gauge, and when it's at low levels, we think it could be a prudent time to move a little more out
of risk assets.
There was justification for some of this — economic data was supportive
of risk assets and the new US administration is still promising a raft of measures that may support corporate earnings (at least in the short term).
We believe that the Fed's continuing (and increasingly glaring) inability to normalize interest rates validates our long standing thesis that monetary extremism can not be unwound without triggering a slew of unacceptably painful consequences for the holders
of risk assets and bonds.
This could include setting targets for nominal GDP growth rather than inflation, investing in a wider range
of risk assets, making plans to allow base rates to turn negative, and underscoring the importance of avoiding a new recession.
Indiscriminate selling
of risk assets could translate into buying opportunities in these assets, including in U.K. - listed stocks that benefit from pound depreciation (72 % of FTSE 100 revenues are earned abroad).
He explains that when a government body in this case the CBN steps in and sets price at levels where they would not ordinarily go by themselves, they are repressing the price of interest rate, inflating the price
of risk assets.
Rising rates have been a key driver in the recent repricing
of risk assets and bouts of volatility, but there are other factors at play.
This, in turn, propels valuations
of risk assets higher, at the expense of lower projected returns in the future.
As a factual matter, on average, the universe
of risk assets has become more expensive over time, and implied future returns have come down.
The measures would make the expansion
of risk assets by commercial banks more costly.
Recent market volatility shouldn't be enough to threaten the economic cycle, but does it temper optimism about the return potential
of risk assets?
Rising rates have been a key driver in the recent repricing
of risk assets and bouts of volatility, but there are other factors at play.
As we remain conservative in our 2018 outlook, essentially waiting and preparing for the meaningful repricing
of risk assets, it seems reasonable to once more emphasise the defensive qualities of convertible bonds.
But maybe the problem here isn't the Fed but that markets are slowly but surely pricing in global deflation, which would explain why asset allocators are shifting out
of risk assets into safe haven assets.
As a result, those wanting to do best in investment management should keep a supply of short - to - intermediate high - quality debt as the performance
of risk assets may vary considerably, which will affect the ability to achieve fixed commitments.
The trouble with those targets is that regardless of what the trading price
of the risk assets is, the cash flows that they produce will not support those targets.
Three months later (9/30), a wide variety
of risk assets are trading near 52 - week lows or near year - to - date lows.
2017 witnessed a huge spike in the valuation
of risk assets, as volatility hovered near historic lows and perceived risks failed to materialize.
Broadening confidence that the synchronized global expansion — now juiced with U.S. fiscal stimulus — can persist has spurred an embrace
of risk assets globally.
Not exact matches
The minutes
of the Fed's June meeting noted that «some participants suggested that increased
risk tolerance among investors might be contributing to elevated
asset prices more broadly; a few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a build - up
of risks to financial stability.»
«Finally, the increased role
of bond and loan mutual funds, in conjunction with other factors, may have increased the
risk that liquidity pressures could emerge in related markets if investor appetite for such
assets wanes.»
Important factors that could cause actual results to differ materially from those reflected in such forward - looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following: 1) our ability to continue to grow our business and execute our growth strategy, including the timing, execution, and profitability
of new and maturing programs; 2) our ability to perform our obligations under our new and maturing commercial, business aircraft, and military development programs, and the related recurring production; 3) our ability to accurately estimate and manage performance, cost, and revenue under our contracts, including our ability to achieve certain cost reductions with respect to the B787 program; 4) margin pressures and the potential for additional forward losses on new and maturing programs; 5) our ability to accommodate, and the cost
of accommodating, announced increases in the build rates
of certain aircraft; 6) the effect on aircraft demand and build rates
of changing customer preferences for business aircraft, including the effect
of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia; 7) customer cancellations or deferrals as a result
of global economic uncertainty or otherwise; 8) the effect
of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange rates; 9) the success and timely execution
of key milestones such as the receipt
of necessary regulatory approvals, including our ability to obtain in a timely fashion any required regulatory or other third party approvals for the consummation
of our announced acquisition
of Asco, and customer adherence to their announced schedules; 10) our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers; 11) our ability to enter into profitable supply arrangements with additional customers; 12) the ability
of all parties to satisfy their performance requirements under existing supply contracts with our two major customers, Boeing and Airbus, and other customers, and the
risk of nonpayment by such customers; 13) any adverse impact on Boeing's and Airbus» production
of aircraft resulting from cancellations, deferrals, or reduced orders by their customers or from labor disputes, domestic or international hostilities, or acts
of terrorism; 14) any adverse impact on the demand for air travel or our operations from the outbreak
of diseases or epidemic or pandemic outbreaks; 15) our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions; 16) returns on pension plan
assets and the impact
of future discount rate changes on pension obligations; 17) our ability to borrow additional funds or refinance debt, including our ability to obtain the debt to finance the purchase price for our announced acquisition
of Asco on favorable terms or at all; 18) competition from commercial aerospace original equipment manufacturers and other aerostructures suppliers; 19) the effect
of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad; 20) the effect
of changes in tax law, such as the effect
of The Tax Cuts and Jobs Act (the «TCJA») that was enacted on December 22, 2017, and changes to the interpretations
of or guidance related thereto, and the Company's ability to accurately calculate and estimate the effect
of such changes; 21) any reduction in our credit ratings; 22) our dependence on our suppliers, as well as the cost and availability
of raw materials and purchased components; 23) our ability to recruit and retain a critical mass
of highly - skilled employees and our relationships with the unions representing many
of our employees; 24) spending by the U.S. and other governments on defense; 25) the possibility that our cash flows and our credit facility may not be adequate for our additional capital needs or for payment
of interest on, and principal
of, our indebtedness; 26) our exposure under our revolving credit facility to higher interest payments should interest rates increase substantially; 27) the effectiveness
of any interest rate hedging programs; 28) the effectiveness
of our internal control over financial reporting; 29) the outcome or impact
of ongoing or future litigation, claims, and regulatory actions; 30) exposure to potential product liability and warranty claims; 31) our ability to effectively assess, manage and integrate acquisitions that we pursue, including our ability to successfully integrate the Asco business and generate synergies and other cost savings; 32) our ability to consummate our announced acquisition
of Asco in a timely matter while avoiding any unexpected costs, charges, expenses, adverse changes to business relationships and other business disruptions for ourselves and Asco as a result
of the acquisition; 33) our ability to continue selling certain receivables through our supplier financing program; 34) the
risks of doing business internationally, including fluctuations in foreign current exchange rates, impositions
of tariffs or embargoes, compliance with foreign laws, and domestic and foreign government policies; and 35) our ability to complete the proposed accelerated stock repurchase plan, among other things.
LONDON - Bank
of England Executive Director, Financial Stability Strategy and
Risk Alex Brazier will participate in London Business School's
Asset Management Conference 2018 0830 GMT.
Much as advisers cling to the long - term view
of portfolio management, there's something to be said from jumping out and in
of over - and underperforming
asset classes, at least with money you can afford to put at greater
risk.
Among the biggest issues oil - and - gas - exploration companies face in the search for new sources
of hydrocarbons is putting humans or high - value
assets at
risk.
Remember though, if you default on a secured loan then the
assets or
asset class you used as a security could be seized by the creditor in a Court procedure that could also put your company out
of business, so there is some element
of risk to consider with
asset - based financing.
«I'm not going to be dismissive
of the
risks, but I think markets have priced them in and if anything as we look at the fundamentals
of stock markets around the world, the fundamentals
of European equities right now are I think significantly better than they are for the United States,» said the managing partner
of Triogem
Asset Management and global investing expert on CNBC's «Fast Money.»
European Commission Vice President Valdis Dombrovskis, pictured above, said at a February roundtable in Brussels that digital
assets «present
risks relating to money laundering and the financing
of illicit activities.»
Their proclamations substantially
risk devaluating a major
asset of mine.
What that means is that you are in an environment that is going to have further trouble in terms
of investment returns that are in areas that are based on economic growth and areas that do relatively well like bonds... Broadly speaking, I think that investors should be looking for lower prices on most
risk assets in these developed countries with the exception
of Japan.»
«Given (new CEO Christian Sewing's) background in credit
risk and commercial banking it could be seen as a signal
of a move from investment banking,» Colin McLean, managing director at SVM
Asset Management, told CNBC in an email.
Those who derive most
of their income from
asset - price appreciation, rather than salaries, say higher taxes would unfairly punish
risk takers.
Bhanu Baweja, head
of emerging market cross
asset strategy at UBS, says the tax, combined with other regulations, could help reduce financial
risks.
On top
of the
risk of federal prosecution, IRS targeting and
asset seizure, cannabis entrepreneurs have to cope with the hazards
of conducting a business that deals mostly in cash, since a majority
of traditional financial institutions — banks, credit card issuers, and payment transaction companies — won't provide services to the industry.
And if that continues for the next couple
of months, it's a green - light for Japanese
risk assets,» he added.
In 2010, in the wake
of the financial crisis, the Fed and its global counterparts signed the so - called «Basel III» accords, under which all countries agreed to raise the minimum level
of capital banks must hold to 8 %
of their
risk - adjusted
assets.
«Climate change both threatens [Department
of Defense]
assets globally and appears to enhance the
risk of civil conflict in conflict - prone countries,» Dr. Robert Kopp, a professor in the department
of Earth and planetary sciences at Rutgers University and associate director
of the Rutgers Energy Institute, told Business Insider.
«We were looking for very specific types
of assets and drilling deals to make the
risk - return work for us,» David Albert, co-head
of Carlyle's Energy Mezzanine Opportunities funds, said in an interview.
It's all about
risk - adjusted returns and in the case
of venture, the
asset class flat out isn't performing.
Soon after, concerns about liquidity and
asset quality put many other institutions at
risk, including Bank
of America and Citigroup, which took billions in loans from the government to weather the chaos.
While cryptocurrencies are currently too small an
asset class to pose systemic
risks to the financial system, that may change as the space continues its rapid evolution, Mark Carney, chairman
of the Financial Stability Board, said in a letter to G - 20 finance leaders published Sunday.
Bonds remain the most important
asset to diversify the
risk of owning stocks.