Fixed income risk management – the most important lesson
As we wind down our active positions in 2015, it is important to reflect upon our performance, revisit our principles, plan for 2016 and position the portfolios accordingly for the coming year.
The year 2015 was a difficult one for fixed income active...read more
Recently it was announced that the Quebec government will be providing Bombardier with much needed new capital. The struggling CSeries commercial jet program will be moved into a joint venture (JV) and the Quebec government will contribute $1 billion into this JV in exchange for a 49.5% interest in the company. This cash contribution will be...read more
Valeant Pharmaceuticals comes close with a business model based on serial acquisitions and a lack of clarity on true underlying sales trends. With sales growth seemingly dependent on drug price increases and unique distribution relationships, and adjusted EPS bolstered by draconian cost cutting, the company’s real margins and cash flows and the...read more
The past month has been volatile for the health care sector in general, and for Valeant Pharmaceuticals specifically, with the stock down over 50% from the peak in August and approximately 20% year to date. While some of the issues impacting Valeant are relevant to the entire sector (pricing and U.S. government headline risk), many of the...read more
There is no single India. I've come across this theme a number of times over the years, but never as notable as my recent visit to the land of the tiger. I didn't come across a tiger but did cross paths with motorists and cyclists that made crossing paths with a tiger look like an attractive alternative. States, or provinces if you wish, are...read more
Standard & Poor (S&P) recently downgraded Brazil’s credit rating to non-investment grade and maintained a negative outlook, signaling that further cuts are possible. Once a darling of emerging markets, Brazil is now facing a painful and possibly prolonged recession, and is caught between policy inaction and political turmoil – both of...read more
Global risk-off events are becoming an annual ritual. In the past five years it has been triggered by European debt concerns (2011 - 2012), taper tantrum (2013), the big commodity correction (2014) or fear over growth in China (2015). Weaved into these events were U.S. political and policy uncertainties.
Do you remember the worries...read more
China’s monetary authority took the markets by surprise last week, allowing its onshore currency (CNY) to weaken roughly 3% against the U.S. dollar. Western markets, media and certain U.S. congressional officials were quick to cry foul, suggesting China was devaluing its currency to gain an edge – a deliberate act of currency war. In fairness...read more
The global financial crisis (GFC) in 2008 resulted in major deficit funding by governments around the world as the public sector stepped in to counter the shrinkage of private balance sheets and credit demand. At the same time central banks, through conventional and unconventional policies, kept interest...read more
In January 2015, the Bank of Canada (BoC) cut the overnight rate from 1% to 0.75% in a move that came as a surprise to some market participants. This led to a substantial rally in the Canadian bond market to the extent that, at some point, the pricing in the front-end of the Canadian yield curve was implying substantial probability of another...read more