Working Space is sophisticated and spacy. Nevertheless, you can’t sit more than 3 persons at the same table. So, what we did was to do a web meeting with the next table. A new style?
INFLATION IS A SHORT BREAK. MONEY IS BACK TO TECHNOLOGY.
[10Y BEI]
Market Themes
BTC is fading away and COIN is still going South. The market is going back to the norm. SOX and Technology regained momentum with strong numbers. Korean students are suffering losses from Cryptos. This is deja vu and pure young kids would suicide in the climax.
[Bitcoin]
European Credit
A higher rate usually gives you a loss from a fixed income. What's happening in European credit? In short, supply is limited and demand is robust. All in all, the market is the very tight even higher interest rate. ECB is accelerating purchase in the market.
[Gross Issuance]
The cash position is the highest since 2005. The COVID devasted the world economy, but corporations are smarter to survive with preemptive actions.
This is ironic, but more bonds are upgraded this year, specifically to IG from HY. The reason is that companies that had enough cash before getting into the COVID crisis, buffers.
[Upgrade vs. Downgrade]
When it comes to the default rate, the previous peak was 7%. It's 4% this time with consensus expectation going down to 2% in 2021.
「Cash to Debt ratio]
In a nutshell, COVID19 is a nightmare for society and some industries, but not devastating economic systems. If you are lucky, you are making more, if not, you are out of the labour market. No need to sell in rush.