Each year, JPMorgan creates an annual tongue-in-cheek
list of bond marketplace awards.
The bank named Jay Powell the executive landowner the year
while giving Janet Yellen the lifetime achievement
- Check out all of the awards below.
JPMorgan creates an annual tongue-in-cheek list of bond market
awards. Here it is for 2017…
Bond of the Year – Veolia 0% due 11/20. It’s not
that a BBB-rated French company was means to steal at ZERO
percent, it’s that they actually charged lenders a reward for
the payoff of holding their debt: 100.078 on the reoffer, or a
disastrous produce to majority of -0.03%! Either lending in the
open markets isn’t what it used to be or we’ll demeanour back on
this as another sign of over-exuberant financial policy
distortion. My only doubt is, if they had over EUR 1B in
interest, because did they only issue EUR 0.5B?!? For those
wondering, we am happy to report that we upheld on the new issue.
Central Banker of the Year– Jerome
“Jay” Powell. Honestly, we adore the choice. He’s a very
offset mix of genuine markets knowledge and official
institutions ideology. He’s peaceful to plea the consensus
views at times, but once a decision is made, he has a story of
getting behind it and making it work. But how on earth did he do
it?!? He was on no-one’s list at mid-year, nonetheless facilely took
down Cohn, Yellen, Taylor and Warsh. We should keep a very close
eye on him – he’s politically some-more shrewd than he gets credit
for. Now, Jay…just painlessly ‘normalize’ and deregulate so that
you get re-nominated next year!
Lifetime Achievement Award– Janet
Yellen. She’s finished it! She’s the first Fed chair in
about 40 years though a retrogression on their watch. She also
started the normalization routine with both rates and the balance
sheet…while gripping the economy rolling forward and the capital
markets humming. we wish we continue to hear her policy musings in
the future…she’s one cold lady!
Currency of the Year– Mexican
Peso. Wait a minute…wasn’t that banking ostensible to be
passed and buried with a new US boss and administration
hell-bent on ‘America first’ and protectionist policies? It’s a
absolute sign that a banking can get oversold and that there
are two sides to the trade. Congrats to Banxico for stepping in
to support their banking with a absolute policy response and to
the investors that happily went along for the ride.
Comeback Player of the Year– Developed
Market Government Bonds. we know I’m a bond manager but,
frankly, I’m getting a little sleepy of this. Wasn’t this supposed
to be the year that we saw executive banks tie financial policy,
impulse from DC and supervision bond yields reset at higher
levels? The global economy is just excellent and acceleration is OK –
sure, we’d like a bit some-more of both – but where is the need for
these emergency executive bank policies that are gripping real
yields at zero? While it is loyal that the produce of the whole US
Treasury marketplace is up about 25 bps this year, longer maturity
yields are actually down and the Treasury index has generated a
certain sum return of over 2% so distant in 2017. It’s time for
executive banks to take the punch play divided and let bond yields
find their own turn though the exaggeration and price-insensitive
shopping they have created.
Unsung Hero – The Yield Curve. So important, but
so misunderstood. If it weren’t for a flattening produce curve,
bond marketplace earnings would demeanour bad if not negative. In some
respects, it was just BAU: the Fed raises rates and the curve
flattens around where investors play ‘guess the depot Fed
supports rate’. This time around, assuage acceleration expectations
and the ongoing swell of cash exported from abroad into the
US marketplace also weighed on the prolonged finish of the US produce curve. It
has given combined some stress in the markets as flattening yield
curves are the normal predecessor to recession. We’re not
worried. For the time being its flattering normal and we’ll see what
happens to the bend when the Fed and ECB dial down the distance and
enlargement in the change sheets. What WOULD worry us is an inverted
BTW: the curtain up in this difficulty was European bank capital
notes. Good yield, tidier loan books and toilsome regulation
designed to forestall another predicament – what’s not to like?
Villain in a Leading Role – Bitcoin. we confess
that we was getting worried about a month ago. Every item class
and item was so good behaved, we wasn’t certain we would even have
the endowment this year. And then it happened – like a holiday
spectacle – Bitcoin went vertical. We know the rare amount
of income copy has combined poignant item cost acceleration –
but where was the bubble? We always have one at this theatre in the
cycle which needs bursting. One of the good definitions of an
item burble is that you can graph the cost of the item on a
logarithmic chart, and if there is ceiling span in the line –
BUBBLE! Well, here it is. I’m not going to rubbish my time
explaining the sound concepts of ‘store of value’, ‘blockchain’
or ‘digital currency’. They will all make some-more clarity to me once a
executive bank administers them. But moves of 10-20% in a day reek
of financial additional and mania.
Rookie of the Year – Cross Currency Swap Basis.
Who knew that this little famous domain of banking and bond geeks
would emerge into the spotlight as the exigency for
bargain 2017 collateral marketplace flows? In short, the pools of
collateral proprietor outward the US are anticipating their way into US
assets, and are then hedged back to their home currency. The
calculation on the cost of the banking sidestep is formed off of the
differential in brief term seductiveness rates and helps to quantify
the produce and/or return intensity of the investment. For the bond
market, figure of the produce bend in the US and the home market
are important, for other item classes, not so much. Anyway, when
the cranky banking barter improves, unfamiliar flows accelerate into
the US; when it declines, flows tail off. Fed normalization is
going to make this a heck of a lot some-more fun in 2018!
Runners up – Corporate holds and municipals.
Just harsh appreciation all year…every back up was met with
buying…BORING. Tax remodel ought to impact these sectors next year
as both the volume and form of distribution should change along with
the bottom of intensity buyers.
Most Valuable Player – QE. we really wanted
‘volatility’ (the deficiency of it) to be the MVP, but we just
couldn’t do it. We knew that the immeasurable pool of income printed via
QE was sloshing around the markets and joyless volatility
while inflating prices. There was no indicate fighting it, and we
along with other investors finished income by just going with it. Sure
the macro economy was fine…sure corporate fundamentals were
improving…sure executive banks were being studious in withdrawing
accommodation. But how to explain the abounding valuations across
markets? The soft backdrop simply combined the cover for the
immeasurable pools of liquidity to upsurge into markets. This time next year
it will be different. The global Central Banks’ total balance
piece will change from enlargement to contraction. Then we will see
if investors had been picking up nickels in front of a
steamroller given Q1 2016!
Get the latest Bitcoin cost here.