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May, 2017

 

AQS|

Asset Management for Insurers

 

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Perspective

 

Memorial Day - Remembering Our Veterans that Gave All

 

Have a safe long weekend.  Remember all those that served.

 

Driving a Bus - The Plight of the Mutual Fund Manager

 

Corporate bond fund managers are sitting on cash - over 2%.  Anticipation?  Fund inflows?  It speaks volumes to the direction of rates.  AQS Point of View - May.

 

Regulations Hurting Liquidity - Yes or No?


Liberty Street Economics, a publication of the FRB-NY published a piece in October, 2015.  No indication of regulations hurting liquidity.  Then again in January, 2017.  

Most recently an epiphany.

 

AQS vs Barclays Total Return Indices

 

Total return performance below and more metrics farther down.  Have a look.

 

AQS vs Select Barclays Bond Indices

 

 

Smack Down 2017?

 

Smack Down 2017?

 

Prior to the financial crisis, structure traders were taking for granted the collateral that supported RMBS, CMBS, ABS, and CLOs.    

 

Then the smack down of 2009.

 

Recently, Moody's dissed a Santander deal because only 8% of the loans were income verified.  Bloomberg reported separately that CLOs are a big hit in Asia  Citigroup reports that domestic manager's exposure tripled in some classes (zerohedge).

 

Coincidentally, China was downgraded by Moody's for the first time in 30 years.  Economy slowing, growing debt.

 

$14mm For This Dirt?  Location, location, location.

 

Recently, 31 acres west of Chicago traded for $14mm - double the going rate.  The owner installed the equipment shown below.

Back in the dayhttp://files.constantcontact.com/acbfd869001/da4b07f7-26eb-4e66-8734-9e7db6926cd6.jpg, the speed of light was so much faster than everything else, it transcended time and space.


Distance didn't matter.

Light was going to get there before anything else.

What happens when everything moves at the speed of light? Distance matters.  Closer is faster than farther.

This property is adjacent to the CME data center - where trade info is dispersed.  It saves a nanosecond or two.

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Performance

 

 

 

Managed portfolio metrics updated monthly

 

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Looking Forward

 

The FOMC Primer

 

In January, 2013, the FRB produced a document, "The Federal Reserve's Balance Sheet and Earnings: A primer and projections"

 

It provides insight into the Fed's game plan.  It's proving right so far.

 

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Fund flows have been strong since the beginning of the year.  Flies in the face of the reflation trade.  We think down-rate risk exceeds up-rate risk.  Click for larger image.

 

10 year - BAA spreads - 5 years.

 

This goes a long way to explain why fund managers are sitting on a larger pile of cash.  A larger image here.  

 

 

AQS Asset Management | | larry.white@aqsllc.com | http://www.aqsllc.com
5806 Mesa Drive
Suite 220
Austin, TX 78731

 


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