…corporate debt is just one notch above junk status!

by | Jul 8, 2019

“In every life, there comes a day of reckoning – a time when unsettled scores demand retribution, and our own lies and transgressions are finally laid bare.”

– Emily Thorne

Part of the answer has been revealed. 

Last Friday’s job report gave evidence of a strong job market.  Over 224,000 jobs being created last month.  Having rebounded from the previous month, June’s numbers showed little reason for Fed easing later this month.

Alan Greenspan has said in the past that the last hike in a tightening cycle is probably not needed.  Perhaps Mr. Powell has read Mr. Greenspan’s mention of this and is trying to figure out how to take the last rate hike back.  So far, the data isn’t giving him much support.  But the month is young, and CPI and PPI will get reported later this week.

I’m hoping the Fed doesn’t cut rates and that a path to normalization continues. 

The world is awash in fiat currency as central banks around the world try to stave off dwindling growth and deflation.  But at some time soon the monetary derivatives of QE will need to end less we have the day of reckoning.  How much more can be achieved at the margin with a 25 or 50 bps rate cut?

Half of all corporate debt is just one notch above junk status.

Agustin Carstens of BIS (Bank for International Settlements) states that because of continued global QE, we run the risks of asset misallocation, asset mispricing, and loss of financial stability.  Our monetary policy cannot save the global economy, but it can do grave damage to the domestic economy we live in.

 

Running the risk of another self-induced crisis seems hardly worth it.  The next one may be more costly than the last.

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.