Mast Investment Letter July 2019

Mapping market-based information measures relative risks and returns - protects against financial product forecast over-reach. Another take on the administrative state, democratic governance remains primarily as media commentary on the spectacle. Government-engineered economies decrease function and efficiency. Government dependency transfers to investor dependency on financial inoculation. Zombie companies now account for 16% of U.S. listed companies. Low expected returns in financial markets encourage investor demand for increasingly undefined/undisciplined private investment funds. Funny money populates SPACs, IPOs and un-invested private equity funds in search of meaning. Former blue-chip investment firms are emasculated into residential real estate flipping, private equity funds, hedge and PE lending, pools, collateralized bonds tranches and trusts. Gone are the days valuing their expertise behind their brand-name. The new focus is packaged product marketing.

 

 

 


Mast Investment Letter June 2019

Wealth management account financial products serve as risk waste disposal sites. At best, the downhill waste flow is diversified. Fed and debt data confirm vulnerability facing financial system. Highlighted risks include less-regulated private credit and high-yield municipal debt. Speculative credit loans yield more that bonds due to appeal of floating rates, before currently inverting yield curve. Collateralized loan obligations (CLOs) are back and loaded into ETF and private equity financial products. Zillow refocuses business on home-flipping just as residential housing data cools. Riskier home borrowers get easier Fannie Mae and Freddie Mac loans. Japan and Euro central banks send investors to the cash mattresses. Same internationally repressed investors bid up U.S. financial assets. Negative interest rates abroad create substantial amounts of cheap money investment liquidity. Unicorn company IPOs work differently now than in 1999. Low volatility funds cause volatility. Gold yields more (0%) than $10.6 trillion negative-yield global debt.