Hunter Frey, Analyst

A lot happened over the past week with the U.S. presidential election and the announcement of a potential COVID-19 vaccine. These occurrences can have similar, contrary, immediate, or lingering effects on different industries to different degrees.

With the presidential election results delayed into Wednesday and possible litigation extending into the later part of the week, we all eagerly wait on who will ultimately win the U.S. 2020 Presidential Election.

Since 2008's subprime mortgage meltdown, policy implementation, decentralizing risk, and correcting systematic issues continue today. One such instrument, Credit Risk Transfers (CRTs), which have an enigmatic backstory, have become a popular means of decentralizing credit risk while providing an avenue for institutional investors to diversify their agency mortgage loan exposure.

The coronavirus pandemic, U.S. presidential election, economic uncertainty, stock market volatility, historically low-interest rates, fiscal spending on stimulus, and continued quantitative easing have been the headlines of 2020. However, as macroeconomic and geopolitical uncertainties persist amid continued debate of additional fiscal and monetary intervention, one asset is poised to continue its 2020 outperformance: gold.

Almost eight months into coronavirus-led shutdowns and limitations, it appears that most individuals have adapted to this “new normal” and way of life. Since March 2020, many Americans have experienced extreme financial market volatility, job layoffs, and asset class dislocations that rival the Great Recession of 2008.

There have been extensive debates about corporate stock buyback programs. Some critics argue that companies create inequity and do not focus on improving employee benefits, business strategies, and R&D programs. On the other hand, proponents argue that allocating capital to shareholders allows the capital to be reinvested in productive facets. Therefore, advocates believe that buybacks have, in some regards, taken the place of ordinary dividends to return cash to shareholders.

Equity and credit analysis rely on accounting principles and future financial performance. Analysts regularly determine a company’s fiscal strength by comparing financial ratios and accounting statements (income statements, balance sheets, cash flow statements, etc.) to their peers.

As yield becomes increasingly difficult to find in fixed income markets how can an investor take advantage of the growing corporate credit environment, low debt service rates, and a lower exposure to interest rate risk as rates are expected to be volatile in the near future? To answer this question, short duration corporate debt with rules based fundamental metrics and behavioral analysis.