AQS Performance and Perspective - August, 2017
AQS| Asset Management for Insurers
Driving the Bus - Are We Being Taken
for a Ride?
We can wring our hands about the Fed but it isn't the
central bank pushing rates down. We make a case for watching
fund flows in this month's AQS
Point of View.
Fed July 25-26 meeting
minutes were released August 16. The mercifully abbreviated
release covers the high points. The operative words
"The Committee expects to begin implementing its balance sheet
normalization program relatively soon, provided that the economy
evolves broadly as anticipated;", suggests UN-reinvestment in
the 4th quarter.
What, Me Worry? Frothy
You may not know it but MAD
Magazine did not coin the phrase "What, me worry?"
Today, the iconic phrase is best applied to fixed income
investors - the bus drivers referenced above - that must respond to
fund inflows. We take a deep dive on some
"frothy" examples in the end of this month's AQS
Point of View.
Jeff Gundlach, CEO of DoubleLine
got vocal about liquidity, frothishness
(yes, made it up), and capping
the size of his total return fund. What's up? He
believes size matters. He wants a smaller bus.
The AQS Corporate Governance Workshop -
Pittsburgh, September, 21
AQS will be hosting a corporate governance workshop for
executive management and directors. 8 speakers have 40 minutes each
to state their case and answer questions. Learn more about this
Last spring, AQS hosted its annual insurance symposium in
Austin. Speakers included A.M.Best,
Moody's, Fitch, Goldman Sachs, the NAIC and the young man to the right
who explained how he has embraced technology (LinkedIn) to reach
prospects. Want to see who else showed up?
We hope you will make plans to attend our Pittsburgh
workshop. Encourage others in your organization as well. It's
a single day and there is no charge to attend.
The Gasoline Tipping Point?
You may have found yourself behind a vehicle sporting a
"zero emissions" license plate. Easy to find. Look
for the smug. South Park episode 2,
season 10: Smug Alert!.
The fact is that
while the car may not emit CO2, the power plant that makes the
electricity emits more because of the increased load. There
are the batteries too. How many we gonna
need? Lithium? Probably something ugly about disposing of
But that isn't the
point. It's the giddy, frothy environment in which true-believers
will risk real money to buy Tesla's
8 year, NAIC 4 rated bonds. Like we've maintained, it's a
produced a piece recently wherein the author suggested electric
vehicles could potentially tip demand for gasoline into contraction.
China's Mountain of Debt
Leverage, for lack of a better word, is good. Until
it isn't. Chinese officials are trying to rein it in.
Referring to it as the 'original sin' of China's financial
system, leverage has swelled over the past decade -- partly because
policy makers were trying to cushion a slowdown in growth from the old
normal of 10 percent plus.
Wealth management products, non-bank financial institutions,
shadow banking, repos and negotiable CDs are among the culprits.
Having successfully overseen an explosion in new types of
credit, the Chinese are having to pivot into the role of
gatekeepers and supervisors -- and to coordinate themselves better as
risks pile up.
article from Bloomberg.
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