Facts to Engage Your Clients2019-01-14T18:01:20-04:00

Engage Your Clients

It's Called Junk for a Reason

Moody’s recently warned that a large number of possible “junk bond” defaults could be in play this year. Debt for U.S. companies has surged since the last financial crisis, and an abnormally large amount of these bonds will “re-set” in 2019, meaning these companies will need to refinance their debt at higher rates.

Trouble Overseas?

Both China and Europe face headwinds given their slowing economies. In China, we continue to see warning signs – the most recent being auto sales falling 19% in 2018, their first annual drop in 20 years.

What Say You, Yield Curve?

Economists warn that an inverted yield curve is a precursor to a recession, generally looking at the yield of the 2-year relative to the 10-year as the primary gauge. Each of the last 3 recessions were preceded by an inverted yield curve in the 2 and 10. In December, the 3-year and 5-year inverted for the first time since 2007.

It's Bad All Over

Individual country performance looks ugly. Germany (EWG), which boasts the largest economy in Europe, saw stocks fall 21.4%. Canada (EWC) -17.2%, Mexico (-14.6%), United Kingdom (EWU) -14.3%, Japan (EWJ) - 14.1%, China (FXI) -13.3%, France (EWQ) - 12.9% and Australia (EWA) -12.0% all posted double digit negative returns for the year.
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