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In a survey of readers, Smith's Research & Gradings asked about people who have done a great job during this Coronavirus crisis. Robin Prunty, Managing Director, Head of Analytics and Research at S&P Global Ratings came up a number of times, prompting our conversation with her.
A COVID-19 pandemic, rising business bankruptcies, pressure on government finances, a global economic meltdown and an increasingly tenser relationship with China – what else could go wrong for Japan? Apparently, there is one more thing: Fitch has changed its outlook for Japan’s “A” sovereign rating from stable to negative. Moody’s rates Japan “A1” (stable) and S&P gives Japan a sovereign rating at “A+” (stable). We think it is possible to see Moody’s and S&P follow with negative outlooks later in the year. Smith’s shares many of the same concerns with Fitch about Japan’s credit picture and has a negative outlook. Moreover, Japan’s deteriorating creditworthiness is significant in that the Asia-Pacific country is the world’s third largest economy, a leading exporter and staunch U.S. ally. The deeper Japan sinks, the messier Asia’s geopolitical landscape becomes.
The Grand Ethiopian Renaissance Dam (GERD), which began construction in 2011, is nearing completion, including the filling of a reservoir necessary to provide water flow for an electric power project. This development provides Ethiopia major leverage over the countries downriver and could boost Addis Ababa’s power throughout Africa. The GERD also raises the delicate long-term issue of food security for Egypt and Sudan, two countries with large and growing populations which have long histories of drought, famine and flooding.
In voting conducted by institutional investors, The 2018 All-Star Deal of the Year was awarded to the New York Transportation Development Corporation for the Delta Airlines, Inc - LaGuardia Airport Terminals C&D Redevelopment Project.
This joint public/private venture between NASA and SpaceX begins a new chapter in space exploration. How will this effect future commercial demands in space?
Oracle co-founder Larry Ellison and Tesla founder Elon Musk both agree when it comes to California's $77 billion high-speed rail project—the project is going to jump the tracks.
Clean energy needs to include reliability requirement as new technology advances. Transformation of the energy mix used in electricity generation globally has been focused on development of renewable sources of energy such as wind and solar, but the major stumbling block has remained reliability.
Preston Hollow Capital, an independent specialty municipal finance company based in Dallas, outlined its response to the recent ruling by the Delaware Chancery Court, which found Nuveen guilty of using "threats and lies in a successful attempt to damage [Preston Hollow Capital] in its business relationships." The ruling was delivered on Thursday, April 9, 2020 in a 60-page Memorandum Opinion from Vice Chancellor Sam Glasscock III.Vice Chancellor Glasscock found Nuveen liable for the anti-competitive and injurious actions of its team led by Nuveen Head of Municipals, John Miller, in intentionally and illegally interfering with Preston Hollow's business relations with its primary lender and six major Wall Street investment banks.Jim Thompson, Chairman and Chief Executive Officer of Preston Hollow Capital, stated, "Municipal borrowers deserve a truly competitive marketplace where they are able to select the capital provider that meets their needs in funding their vital projects, not the needs of a large money manager like Nuveen. This is, in essence, the very injustice that the Vice Chancellor exposed. His ruling meticulously details Nuveen's campaign of anti-competitive, untruthful, unfair and destructive conduct carried out by Miller and his team against Preston Hollow in our marketplace. It's important to remember that the real 'winners' are municipal borrowers across the country, as we expect Nuveen to heed the Court's stern admonition that it would be 'exceedingly unwise for Nuveen to mount a similar campaign of malicious behavior' against Preston Hollow going forward."Nuveen said in an emailed statement the firm “respectfully disagree[s] with the court’s finding that Nuveen tortiously interfered with Preston Hollow’s business.”
The High Grade Municipal Bond Portfolio managers basked in the warm sunshine of steady credit quality while high-yield municipal bond funds saw massive outflows. Mark Paris, CIO, Head of Municipals at Invesco, hosted an investor call on March 30, 2020. Eddie Bernhardt, head of managed accounts joined him for the presentation. Invesco purchased Rochester Funds last year and 2019 was a period of consolidation after the acquisition. The newly combined entity has over $60 bln. in Municipal Assets Under Management. Mr. Paris heads up a municipal bond team that includes 15 portfolio managers including Jim Phillips, Jack Connelly and Scott Cottier. Invesco's municipal credit research is lead by Mark Gilley, CFA (27 years of experience) and the team includes Angela Uttaro, Mark Stockwell, Mary Jane Minier, and Robert Bertucci. The Quant Research & Portfolio Analytics are lead by Casey Ryan and Michal Milewski. Invesco emphasized the demand for tax-exempt municipal bonds had experienced unprecedented growth. The reasons for the record weekly inflows were due to a myriad of factors, starting with the Trump Tax-Reform's elimination of State and Local Tax Deductions. Falling interest rates and collapsing credit spreads contributed to a strong performance for municipal bond funds.
"The American Dream Mall was a nightmare to begin with and it is never going to work in the new normal," according to a senior portfolio manager in Boston. Indeed. The American Dream Mall is the poster child for what went wrong during the last bull market in high-yield municipal bond: Excessive amounts of debt; Bloated feasibility studies; Revenue streams that are thin and tenuous. Moreover, there is a case being made that retail shopping centers and malls were never going to work. "If there is any lesson from the COVID-19 crisis it's that people are shifting to shopping on the internet," a portfolio manager from New York said. "Amazon is doing a record business."
Summary: Since the global outbreak of coronavirus in early 2020, there has been a move to stockpile food, increase prices, and in some cases, impose export restrictions. In the U.S., as the numbers of those infected and dying rises and unemployment rapidly rockets upwards, consumer behavior has turned more cautious and food distribution centers are swamped by hungry families. This situation is not helped by the closure of restaurants and concerns over distribution systems and the health of drivers who transport food and other household items. There are also increasing questions over food cultivation and the labor needed to bring crops to harvest. Although it is too early to be sounding the alarm regarding a food security crisis, the seeds for such a development are possibly being planted, which could lead to social turmoil. The risk is the creation of a food crisis when there really isn’t one – yet. This issue is likely to become more significant if the pandemic continues through the summer, dimming hopes of economic revival and raising the specter of food shortages.
Summary: Since the global outbreak of coronavirus in early 2020, there has been a move to stockpile food, increase prices, and in some cases, impose export restrictions. In the U.S., as the numbers of those infected and dying rises and unemployment rapidly rockets upwards, consumer behavior has turned more cautious and food distribution centers are swamped by hungry families. This situation is not helped by the closure of restaurants and concerns over distribution systems and the health of drivers who transport food and other household items. There are also increasing questions over food cultivation and the labor needed to bring crops to harvest. Although it is too early to be sounding the alarm regarding a food security crisis, which could lead to social turmoil, the seeds for such a development are possibly being planted. The risk is the creation of a food crisis when there really isn’t one – yet. This issue is likely to become more significant if the pandemic continues through the summer, dimming hopes of economic revival and raising the specter of food shortages.
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Smith's Research & Gradings focuses on the people, sectors and news that matter the most to you. Smith's analysis is an indispensable part of Wall Street and the world's capital markets. Our approach was inspired by the need for a consistent analytical approach across all asset classes. Smith's Gradings are a time-tested, performance proven, and principles-based approach to risk. We go beyond the numbers to connect the dots for the world's decision makers. We can enhance the performance of investments in assets around the globe, while helping to ensure the safety of portfolios here at home.
Let a subscription to The Global Economic Doctor provide you with access to sovereign news, analysis and insights. Concise and powerful, the Global Economic Doctor spans the globe, giving you a read on how today’s market developments and key players are impacting your business around the planet.
