Market Insights

Gain actionable market insights with whitepapers, articles and reports from our analysts.

  • Real Estate

    Core Real Estate for U.S. Insurers

    June 2019

    Core real estate equity offers insurers a multitude of potential benefits.

  • Macro Strategy

    The Inverted Yield Curve: Harbinger of Recession?

    May 2019

    An inversion of the U.S. yield curve historically precedes a U.S. recession with an average lead time of about 14 months. According to our yield curve-based model, there is a 34% probability of a recession in the next 12 months. The Index of Leading Economic Indicators indicates that the U.S. economy is slowing, not contracting. The latter, not the former, is what historically tends to precede a recession. The spread between year-over-year nominal GDP growth and the federal funds rate suggests that current policy is still accommodative in our view. Solid corporate profit growth and a record low unemployment rate underpin a positive fundamental view. 

  • Macro Strategy

    Last Time Was Different: Why Recession Fears are Overdone

    April 2019

    We believe the next recession is likely to be anti-climactic, particularly for anyone whose only experience is the 2008 financial crisis. We feel a normal, or possibly even shallow recession is more likely. However, the current weak position of monetary policy means that speed of recovery may be of greater concern than depth of a future recession.

  • Real Estate

    Industrial, Opportunity, and CRE (Abstract Only)

    March 2019

    A modestly weaker demand outlook and similar levels of supply growth should leave fundamentals balanced in 2019. Near term risks include the rollback of lending regulations and the introduction of opportunity zones, which add uncertainty to future supply forecasts. We expect the industrial sector to outperform other sectors in 2019. Further, in this issue of the Investment Strategy Quarterly, we outline why investors have significantly underestimated the pace of industrial demand growth in the past, and are likely continuing to do so today.

  • Agricultural Finance

    California Table Grape Insight

    April 2019

    Despite growing competition from South American producers over the last few years, California table grape growers have remained resilient and expanded output to capitalize on growing global grape consumption, particularly in Asia. Recent trade tensions and rising labor costs have been headwinds for table grape producers. Still, the long-term outlook for California’s table grapes remains positive as fervent global demand and exports will continue to support the industry.

  • Macro Strategy

    Not Dead Yet: Productivity is Looking Mid-Cycle

    March 2019

    U.S. labor productivity growth has been increasing over the last several quarters. This is strange late cycle behavior; improvements in productivity historically tend to happen during the recovery phase of a business cycle. We see this as a sign that the business cycle could have some life left to it, and a recession may not begin until after 2020.

  • Public Fixed Income

    Emerging Market Debt Perspectives: A Specialized Q&A for Insurance Investors

    March 2019

    To say the past ten years have been uniquely challenging for insurance investors would be an understatement. As developed market interest rates fell and regulatory scrutiny increased, many investors turned to emerging market debt (EMD) to reach for the yield their portfolios required. Despite this increased willingness to invest in the asset class, we frequently field questions from clients and prospects in the insurance space about the inherent risks of EMD, especially when compared to developed markets.

  • Public Fixed Income

    Are We There Yet?

    March 2019

    We believe we're in the late expansion phase of the credit cycle. At present there seems to be an elevated risk of recession by market participants in the 2020-2021 timeframe. Our credit cycle model is based on eight key indicators which we’ve back-tested rigorously since the mid-1980’s: high yield spreads, 3 mo. /10 yr. Treasury curve, Senior Loan Officer Opinion Survey, CCC issuance, non-financial debt growth, profit growth, shareholder payout ratio and Fed policy. In prior down cycles (’01, ’08, ’15) our credit model flashed an average of six sell signals each time. Today our model is flashing four sell signals. We don’t expect a credit down cycle in the next 12 months despite recent market anxiety of one potentially occurring.

  • Real Estate

    Investment Opportunities in Private Commercial Mortgages

    January 2019

    Private commercial mortgages comprise a large and diverse asset class which can provide investors favorable risk-adjusted returns, low loss rates, and low correlations with other asset classes. Additionally, their flexible structures make private commercial mortgages attractive vehicles for liability driven investment strategies.

  • Macro Strategy

    Global View: 2019 Risks

    January 2019

    We believe global growth could decelerate in 2019 even as the U.S. economy is expected to remain a point of strength. In our view, the changing relationship between the U.S. and China—and a potentially weaker Chinese economy—is the single most significant risk globally. Market volatility and business confidence are key risks. The Fed hiking cycle and oil price fluctuations also remain key concerns. There is generally more downside risk than upside risk to our 2019 view.

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