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BVTV: Italian election special

With the European economy growing at its fastest pace for a decade – and with Italy itself seeing an impressive return to growth – the uncertainty of an Italian election is something investors will be keeping a close eye on. The country goes to the polls on 4 March, although the outcome is unpredictable with many observers expecting a hung parliament and no outright winner.

To discuss the poten…

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Carillion case study: All was not what it seemed

In its 2016 Annual Report entitled ‘making tomorrow a better place’, Carillion claimed they had ‘a good platform from which to develop the business in 2017’. Less than ten months after publication, Carillion went into compulsory liquidation, bypassing administration and the chance to continue trading. Assets will be realised and distributed to creditors, leaving little or no value remaining. Bu…

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Can bond markets digest the huge supply of U.S. Treasuries that will be issued this year?

The United States government routinely finances itself through short-term debt, which is normally less expensive than long-term debt, due to the upward sloping nature of the U.S. yield curve. This cost saving does increase the risk of default. Rollover risk arises any time short-term debt is used to finance long-term spending. It is what keeps debt management officials up at night.

The U.S. gov…

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BVTV: The calm after the storm?

After a rollercoaster week for equity markets, which saw the VIX volatility index spike to one of its highest ever levels, I’m joined this morning by Craig Moran, fund manager in M&G’s multi asset team. Tune in as we discuss what drove the correction, whether it’s likely to prove a short term risk-off event or a longer-term market reversal, and how much further equities can potentially rally, g…

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Can ESG analysis help improve high yield returns?

Some of the worst performing bonds in the European high yield index in 2017 all had weak Environmental, Social, and Governance (ESG) scores according to MSCI.  Is this is a coincidence or is it indicative of a relationship between poor ESG metrics and bond performance?

To find out the answer, we analysed the 2017 total returns of the 365 bonds in the European high yield market that were ESG rat…

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BVTV: Getting to the bottom of subordinated debt

Subordinated debt enjoyed an excellent year in 2017, AT1 (Additional Tier 1) bonds in particular. But what are the unique features of this sub-asset class and do AT1 bonds still offer value? M&G credit analyst Mark Robinson, who focuses on the banking sector, joined me this morning to explain the challenges that today’s tight spread levels potentially hold for investors.

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BVTV: Can Abe make Japan great again?

Having eventually emerged from the shadow of its lost decades, Japan is currently enjoying its second-longest economic expansion since World War II, having grown for seven successive quarters. John Lothian, deputy fund manager on M&G’s Japanese equity portfolios, joined me this morning to discuss the outlook for the BoJ and what the positive macro-outlook means for Japanese asset prices.

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Davos 2018: M&G’s CEO Anne Richards talks to Jim Leaviss. Are markets headed towards another financial crisis?

This year’s Davos World Economic Forum (WEF) comes at a time where equity and credit valuations look high, where we have “obvious” bubbles in cryptocurrencies, and where bond yields – perhaps an anchor for all financial asset valuations – finally seem to be moving higher.  Global borrowing across governments, financial institutions, companies and households is at record levels.  Can the global …

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Is this a turning point for bonds?

My view is that the US economy is nearer to overheating than slipping into recession. The strength of the US economy is typified by the labour market in many ways. To put some of this strength in context, look at the Challenger, Gray & Christmas Job Cut report. Last year (2017) produced an exceptionally low number of layoffs in nominal terms, and when adjusted to reflect the size of the labour …

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The Venezuelan cash crunch: exporting passports as a palliative?

Venezuela’s cash flow crisis has been well covered. The recent default on its sovereign debt and likely default on the debt issued by its state-owned company, Petroleos de Venezuela SA (PDVSA), combined with collapsing imports attest to its ongoing cash crunch and humanitarian crisis. ¹

A change of economic policy however, would alleviate the crisis and improve the patient’s health. This could …

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