High Yield Spreads

According to Neuberger Berman, high-yield spreads have increased by approximately 200 basis points over the past two months,

reaching around 450 basis points from mid-February levels of 262bps.

 

Widening credit spreads are a red flag in financial markets. They indicate growing concern among investors about the risk of corporate defaults — especially among lower-rated (high-yield or "junk") bonds.
If retirees or near-retirees are in bond-heavy portfolios for income or safety, changes in spreads affect:

 

• Bond values (they tend to fall when spreads widen)
• Future returns (wider spreads could mean higher yields — if defaults are avoided)
  

So it might be time to reassess fixed income strategy, especially around credit risk.

Such a sharp move in spreads often signals a broader economic slowdown or looming recession.

 

Earnings Season

 

Earnings season is live!  This earnings season may be the most important in recent times. 

American exceptionalism has kept investors home.  But look out for the changing tide on investing abroad v. America in the very near future. 

 

It's All About Customer Experience

In recent McKinsey data it reports revenue for companies with higher CX ratings grew 2x faster than peers with lesser ratings.

This adds a quantifiable element to valuations beyond the traditional ratios that may help forecast growth which is what stocks love.

 

 

Continuity and Succession

 

The WSJ reports the share of small businesses that employ a young adult child of an owner has doubled since 2018 and us up 13% YoY as of January. 

 

This may indicate a cooling labor market that is making it more difficult to land entry-level jobs.  At the same time boomer founders are feeling more urgency about making succession plans. 

 

 

Foreign Investors Update

Substantial increase in noise about what foreign investors are thinking and may do in retaliation to tariff talks. 

 

 

Fair or Not?

 

Find your efficiency! I talked about all the time. We are all in different situations but in retirement, there is a lot that can be done to reduce and/or eliminate taxation. Does your financial advisor understand taxation and pay attention to the taxation they cause you? CPA’s can’t talk about your investing and usually are unable to look at your bigger picture making them the wrong place to look for advice. A good financial advisor should have good grasp on your big picture, should be involved in creating an income plan for retirement, and certainly should be striving to make you as efficient as possible.

 

Mortgage Refinance Rejection

 

We can only postulate “why” from this chart but it’s happening. 

 

 

 

ETF's on the Rise

 

BlackRock sees “outcome ETFs” hitting close to $700 billion by 2030. 

Outcome ETFs include buffered ETFs allowing 0% floors with capped benchmark-based upside. 

 

These are evolving very quickly. Essentially these are structured notes in an ETF wrapper and they both look a lot like fixed indexed annuities which typically have better liquidity parameters and earn and lock in the interest annually.

 

 

Our Favorite Read on True Consumer Behavior?

 

 

Bank earnings. This week on BOAs call they stated, “…but in the aggregate, the consumer keeps pushing money into the economy.”

From JPM, “consumers and small businesses remain financially healthy, despite the recent downtrends in consumer and small business sentiment.”

 

So, it’s not all gloom and doom!