22 Jun 2016

A Cloud on the Horizon

“Businesses are Falling Behind on Their Loans Like it’s 2008.”   This is a headline that popped up on my Bloomberg TOP news screen recently.  Since the financial crisis, every bank I have talked to has been focused on increasing C&I lending.  After being snake bit by real estate, banks have all chased after commercial loans.  That makes a headline like this particularly alarming and a situation worth further investigation. Looking… Read More

27 Apr 2016

Corporate Bond Risks and Returns in the News

Yesterday, I was in the middle of updating a chart about the basic risk and return characteristics of corporate bonds when Standard and Poor’s announced they were downgrading bonds issued by Exxon-Mobile from AAA to AA+. It’s a shame to see another company lose their prime rating – there are now only two companies that have an AAA-rating.  Exxon had held the prime rating since 1930, if you include predecessor entities,… Read More

12 Mar 2015

What Corporate Bond Yields are Telling Us

It should not come as a surprise to anyone that markets have performed very well over the past five years. The S&P 500 has earned 16.12 percent per year in the five years that ended in February. Few investors realize that corporate bonds have also done very well over the past five years. For the five years that ended in February, the Barclays US Corporate Bond index has earned 6.22… Read More

12 Jan 2015

Finally, A Regulation You Can Opt-Out Of

In the December 2012 issue of ALM Insights, I wrote an article titled Basel III’s AFS Provision. At the time of the article, the provision detailing the effects of Accumulated Other Comprehensive Income (AOCI) on regulatory capital had been delayed due to a “wide range of views”, and the final outcome was still very much up in the air. Few in the banking industry thought that forcing banks of all… Read More

18 Dec 2014

ALM Insights – December 2014

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: King Dollar Finally, A Regulation You Can Opt-Out Of Reading The Tea Leaves

15 Dec 2014

There’s A Sucker Born Every Minute: High Yield Products

A client called me last week and asked if I had seen an exchange traded fund (ETF) with a 20 percent yield. In fact, I hadn’t. The client said that he was sure that the yield was phony since it was so high that it was ‘too good to be true,’ but wondered how the ETF could have such a high yield. Good question. In this case, the product is… Read More

5 Sep 2014

Why We Avoid Junk Bonds

The Wall Street Journal had a headline yesterday that I couldn’t resist: Junk Bonds Deserve a Place in Investors’ Portfolio. I like to read articles where I agree with the fundamental proposition, but I REALLY like to read articles where the premise completely contradicts my view, or the view of Acropolis. This article falls in the second category since we believe that junk bonds don’t deserve a place in your… Read More

25 Mar 2014

ALM Insights – March 2014

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: The Plan to Wind Down Fannie and Freddie Economic Analysis – Fed Digests Mixed Data Bond… Read More

17 Dec 2013

ALM Insights – December 2013

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: 2013 Bond Performance Review Economic Analysis – Taper Time ALM Model Year End Checkup

13 Dec 2012

ALM Insights – December 2012

ALM Insights is focused on banks and other institutions that use their portfolio to manage risk on both sides of their balance sheet. It takes an in-depth look at securities investment strategies, balance sheet and asset/liability strategies, regulatory topics and general economic information. To view this issue, click the image below. In This Issue: Value in Issuing Callable CDs Dodd Frank – Credit Guidelines Economic Update – Enough Already! Basel… Read More