Commentary

Soft Landings, Hard Choices

This week the Federal Reserve raised interest rates by 50 bps at its December meeting, following four consecutive increases of 75 bps. That brings 2022’s number of hikes to seven. The Fed funds rate target now stands at 4.25% – 4.50%. It had begun the year at zero. Critics worried the Fed took too long…

Private Credit – Why Now? (Last of a Series)

A veteran of leveraged lending and astute Lead Left reader disagreed with our statement last week that private credit terms have never been more investor-friendly. In a note to the editor he compared them to more conservative loan structures and legal protections in the 1990’s. Since then, he pointed out, private equity owners and their…

Private Credit – Why Now? (Third of a Series)

The clock is ticking on interest rate hikes. Who will win the fight on inflation: the Fed with a soft landing or a recession with a hard one? The answer could either push buyers deeper into illiquid credit or reinforce indecision. But private credit has never been a timing game. Opportunistic, distressed and liquid credit are influenced…

Private Credit – Why Now? (Second of a Series)

Last Tuesday the winner of the largest Powerball jackpot winner in history – $2.04 billion – was announced (but not yet identified) by the California Lottery. A gas station in Altadena, just north of Pasadena, sold the ticket (10-33-41-47-56). The lucky recipient can elect a lump sum of $1 billion or be paid in installments…

Private Credit – Why Now? (First of a Series)

In recent weeks we’ve devoted considerable space to how the Fed’s Great Unwind and rate hikes have impacted the economy, capital markets, and private credit. We’ve also examined the backdrop for growth (or recession). Our economist friends have helped sift data to guide investors on where US and global economies are headed. Finally, we’ve analyzed…

Of Rates and Recessions (Last of a Series)

We conclude our unpacking of the rich content delivered by our three top economists in last month’s exclusive webinar [link] by looking at global policies. The Fed is way ahead of the other central banks in its quantitative tightening and rate hike program. The ECB is “dithering” and the BOE not well organized. Japan continues…

Of Rates and Recessions (Third of a Series)

This week we continue unpacking the rich content our three top economists provided for last week’s exclusive webinar [link]. Here are some key takeaways. Nominal GDP remains relatively high in the US, with greater growth reflected in higher corporate revenues and earnings. But real GDP is zero. 3Q is likely positive, thanks to a narrowing…

Of Rates and Recessions (Second of a Series)

The Lead Left’s exclusive Lead Left webinar, ”Of Rates and Recessions: What’s Ahead for the Economy,“ aired yesterday with over 400 attendees. We will dedicate space next week summarizing the views of our three expert economists. In the meantime, let’s position that conversation with a review of the state of our economic affairs as it…

Of Rates and Recessions (First of a Series)

One of many challenges of the investing climate is reading the economic signs. Is inflation coming down or going up? Is the labor market strengthening or weakening? Are we in a recession or just slow growth? Last Friday’s job report was a case in point. Job openings dropped dramatically by 1.1 million, the lowest level…

Private Credit in an Age of Scarcity (Last of a Series)

As our Quote of the Week concisely frames it, the world is changing from one where risk-taking was rewarded, to one where it is punished if not appropriately managed. The question for private credit investors is, can you be rewarded while managing today’s level of greater risk? In a nutshell, the Fed’s withdrawal of systemic capital and…