April 23, 2014 | By Scott Minerd
The U.S. economy is on solid ground as the effects of the difficult winter soft patch fade in the rear view mirror. While some may argue that U.S. financial markets are past due for a correction, all indicators remain strong, and so for now, the great “risk-on” trade continues. In fact, with optimism over corporate earnings rising and the New York Stock Exchange Advance/Decline Line reaching a new high last week; the U.S. equity market looks poised to continue its rally.
The reversal of flows into loan funds last week was disturbing, but, it is not reason enough to be overly anxious for the moment. Our research indicates that certain sectors of the credit market are showing signs of overheating, with triple-C corporate debt particularly overvalued. Against this backdrop, I look forward to attending the annual Milken Institute Global Conference next week, where credit market conditions will likely be a topic of hot debate.
Beyond the U.S. economy, monetary policy and credit markets, I look forward to discussing issues as diverse as the economic emergence of sub-Saharan Africa, rising geopolitical risk in Asia, and slowing economic growth in China. As I noted during my trip to Davos in January, the big cat is out of the bag about the opportunity in Africa. Sub-Saharan African nations have made significant political and structural advances. Nigeria has recently overtaken South Africa as the continent’s largest economy. Indeed, the opportunities are now so great that it is no longer reasonable for long-term investors to ignore the growth opportunity the continent represents.
In the coming days, I will be writing about these and other issues on Guggenheim’s Milken Institute Global Conference blog.
The countries of sub-Saharan Africa have been among the fastest growing economies in the world over the past decade, a trend set to continue over the next decade. In addition to improved governance and stability, a primary reason for Africa’s acceleration has been, and likely will be even more so in the future, the demographic dividend from a booming working-age population. This economically active population is set to double in the next 25 years, and within 30 years, the African workforce will likely have surpassed that of China or India. If managed effectively, Africa could reap many of the same economic benefits that Asia has enjoyed over the last several decades during its own demographic surge.
Source: Haver, Guggenheim Investments. Data as of 4/23/2014. *Note: Regions follow the U.N. Statistics Division definitions.
This article is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author’s opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2014, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.
Bond yields could fall further as rising fiscal risks get priced in.
A properly diversified credit portfolio should have exposure to both high-yield corporate bonds and bank loans.
The COVID Delta Variant’s Looming Threat to Risk Assets.
Brian Smedley, Chief Economist and Head of Macroeconomic and Investment Research, and Portfolio Manager Adam Bloch provide our macro and markets outlook.
Scott Minerd, Chairman of Investments and Global CIO, discussed his outlook for markets and the economy with CNBC’s Brian Sullivan during the Milken Institute 2020 Global Conference.
You are now leaving this website.Guggenheim assumes no responsibility of the content or its accuracy.
Your browser does not support iframes.
2021 Guggenheim Partners, LLC. All rights reserved. Guggenheim, Guggenheim Partners and
Innovative Solutions. Enduring Values. are registered trademarks of Guggenheim Capital, LLC.
how your browser accepts cookies; please see your browser help documentation for more