After his May review of equities (0:40), the dollar and commodities (2:12) and Treasury yields (3:26) DoubleLine Portfolio Manager Ken Shinoda on June 8 eyes the yield landscape across the major fixed income asset classes (4:42) and finds investors still have time to enter these sectors and take advantage of attractive income propositions relative to interest rate and credit risk. Mr. Shinoda then reviews the expectations for the terminal rate on federal funds interest rate (6:09) and inflation expectations, with the market pricing a pause by Fed in June and a hike in July.

For the central theme of this episode of Channel 11, Mr. Shinoda asks (7:46), “Where is the recession that we’ve all been waiting for, that everyone has been forecasting?” Among the key reasons for the absence of recession in the U.S., he thinks, is the unprecedented level of fiscal stimulus, exceeding 30% of GDP, in 2020. “I think some of that money is still out there, and it’s extending out when that recession may hit.” However, he warns that money is finite and running out.

Consumer spending represents two thirds of the U.S. economy. Citing a forecast by Deutsch Bank’s Jim Reid, Mr. Shinoda points out that household excess savings is on track to run out by the end of 2023 or in early 2024. Meanwhile, a variety of metrics point to slowing or contracting growth (10:47), including ISM PSM manufacturing and services surveys, the Leading Economic Indicator (of 10 leading indicators), ISM New Orders, tightening bank lending standards, weaker loan demand and surging interest rates on business loans. “I try not to be so dramatic about it,” but he advises thinking “about positioning. If we’re going to go into recession, you want to own some longer-duration bonds, you want to maybe underweight certain parts of the risk markets.”

Turning to “what looks cheap” in terms of fixed income spreads vs. history (16:21), Mr. Shinoda points to AAA commercial mortgage-backed securities (CMBS) and Agency residential mortgage-backed securities (Agency MBS). On the shorter end of the yield curve, Ken Shinoda sees investment grade bonds that are yielding 6%-7%. Just seems really good time to kind of lock those yields in case the Fed ever cuts and the gift of the T-bill is gone.”…(read more)

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Channel 11: Where’s the Recession?

If you turn on Channel 11, you may be surprised to find that the topic of discussion is the current state of the economy. With so much talk of recession and economic downturn, it’s a breath of fresh air to find a channel that is focusing on the positives and looking at where the recession may be hiding.

The truth is, despite all the doom and gloom in the media, the economy is not as bad as it may seem. Unemployment rates are dropping, consumer confidence is on the rise, and the stock market continues to perform well. So, where exactly is the recession?

Channel 11 seeks to answer this question by looking at the different sectors of the economy and finding the areas that are thriving. For example, the technology industry is booming, with companies like Apple and Amazon posting record profits. The healthcare industry is also seeing growth, as the demand for healthcare services continues to rise.

Additionally, Channel 11 is exploring the impact of government policies on the economy. With tax cuts and deregulation, businesses are finding it easier to operate and invest in new ventures. This has led to job creation and increased consumer spending, both of which are crucial for a healthy economy.

Furthermore, Channel 11 is highlighting the resilience of small businesses in the face of economic challenges. Many entrepreneurs are finding innovative ways to adapt to the changing market and are experiencing success despite the odds.

In addition to these positive indicators, Channel 11 is also featuring stories of individuals and communities who are overcoming financial difficulties. By showcasing these success stories, the channel is working to inspire hope and optimism in its viewers.

While it’s important to be aware of the potential risks and challenges in the economy, it’s equally important to recognize the opportunities and successes that are present. Channel 11 is doing just that by focusing on the bright spots in the economy and challenging the narrative of a looming recession.

In a time when it’s easy to be consumed by negativity and fear about the state of the economy, Channel 11 is offering a refreshing perspective that is both informative and uplifting. So, if you’re tired of hearing the same old stories about the recession, tune in to Channel 11 and get inspired by the resilience and prosperity that is still present in the economy.