Van Hesser's 3 Things in Credit - A KBRA Podcast

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. The consumer has remained a source of economic strength throughout the pandemic, thanks to the strong hand of the federal government. Ahead of the jobs report, we take stock of the consumer’s financial health. 2. The U.S. is in the midst of a productivity boom, something enhanced, ironically by the pandemic. Will it last? 3. We...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. The Great Deceleration. It’s coming. Have we all gotten dangerously use to a life on stimulus? That’s going to change, and it probably won’t be elegant. 2. Your tax dollars are at work. This week, your federal government has been active in ways that touch credit markets. We’ll share our thoughts. 3. Broadband is taking off. We’...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. One of the consumer lending business’ most insightful minds is warning that losses have been deferred through the pandemic and credit underwriting models need to discount the pandemic era loss experience. 2. The West is experiencing its worst drought in at least 20 years, something likely to hit exposed sectors over the course...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. The markets’ obsession with inflation continues unabated. We’ve gathered three distinctly different views from three high-profile sources along with our own and will let you decide where you stand. 2. The NFIB’s Small Business Optimism Index is out for the month of May is out, and the expectations component surprised us. 3. Dus...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. The press is reporting that the Fed will begin to unwind its corporate bond investments made to stabilize credit markets in the early days of the pandemic. Is this a taper tantrum corporate-style? 2. Credit markets are normalizing—what does that mean for supply and spreads? 3. KBRA has published its financial strength rating re...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. Navigating uncharted economic waters requires data, but the data is noisy. Don’t lose sight of what’s happening with consumer confidence—it’s been fairly insightful in framing out the economic recovery. 2. The technology sector gets nicked by creditors from a business risk standpoint. Big tech needs to be reclassified. We’ll ex...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. It surprised us to find that bankers remain cautious in terms of their lending. We’ll investigate. 2. Citi’s Economic Surprise Index just hit the lowest point since June 2020, something hardly consistent with fears of overheating 3. Solar is on a tear! We’ll check in with KBRA’s Head of Consumer ABS to explain what you need to...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. Amazon just issued $18.5 bn in debt and the biggest question is why. The answer is actually quite straightforward. 2. Inflation—the noise around this continues to build. We’ll frame out the issue for you. 3. The Fed just released its semiannual Financial Stability Report. It’s a good news/bad news story th...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. COVID-19 has altered how we need to look at the credit cycle in the future. We’ll tell you how. 2. If you don’t think Bitcoin is relevant to credit markets, you’ll want to pay attention to something we discovered this week. 3. One credit asset class taking off is investment funds issuing bonds. We’ll talk...

In this week's episode, KBRA Chief Strategist Van Hesser discusses: 1. The era of big government is back! This actually has a big impact on default rates. We’ll tell you how. 2. We’ve updated our key themes in credit. Unlike the Fed’s statement, you won’t need to perform forensic analysis on our key takeaways. 3. In this historically low-yielding environment, investors are increasingly getting out...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. Economic Slack—Our index of the U-6 underemployment rate and excess industrial capacity tells us that there is plenty of slack in the economy, giving comfort that inflation fears are overblown. 2. Big Bank Earnings—Our economic canaries in the coal mine. Q1 earnings’ actions and commentary suggest nearly a...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. The Johnson & Johnson vaccine pause is yet another data point that suggests that pandemic risk is not yet in the rearview mirror 2. The economic boom is coming—retail sales’ blowout, the latest high-frequency data gathered by the New York Fed, and the big drop in jobless claims suggest the boom is here...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. BP is but the latest multinational that is attempting to change its stripes to become more bondholder-friendly. 2. The ISM’s latest PMI releases for both manufacturing and services are pointing to a recovery that is looking like it might be a bit unruly, and 3. Jamie Dimon’s letter to shareholders is an up...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. The failure of Archegos and its ripple effects through risk markets. We’ll tell you what is worth worrying about…and what is not. 2. Economically, the “calm before the surge” is transitioning to just the surge—fasten your seatbelts, it’s going to be quite a ride. 3. The economic fortunes of the US and Euro...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: 1. The Fed has joined other prognosticators in materially improving its U.S. economic forecast. Peel off the stimulus effect and prepare to be underwhelmed 2. China’s influence on the global economy, and credit markets, is multi-faceted and it continues to grow 3. KBRA Altman, a division of KBRA Analytics, ha...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: - The cost of just about everything manufacturers need is jumping as the economy roars back to life. Beware of margin compression over the next couple of quarters. - The CEO of General Electric “turned the lights out” on GE Capital this week. There are important lessons learned from this saga, we’ll elaborate...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: • Citadel is the latest nonbank financial to access the investment-grade capital markets. • The pandemic has pushed what was the investor’s single largest concern—rising geopolitical risk—to the back seat. It’s rising again. Don’t lose sight of it. • Few in markets seem to be worried about the health crisis g...

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: The noise around rising rates has become deafening, but the credit story remains sound; The loan market has proven to be a port in the rising rate storm; The Fed acknowledges excesses and vulnerabilities in the financial system, away from banks.

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: Remarkably solid corporate earnings performance in the U.S.; Don’t lose sight of labor market headwinds in the recovery story; Market structure for corporate lending has changed, and it’s bondholder-friendly (at least through the pandemic period)

In this week's episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser discusses: • The Jobs report: Beyond the headline numbers, the quality of the labor market is telling a different story • Energy on the rebound: Energy has gotten caught up in the reflation trade, and it may have some legs • ESG management, not ESG scores: Van explains the difference, as well as KBRA's approach to evalu...

In this week’s episode of 3 Things in Credit, KBRA Chief Strategist Van Hesser: Digs into the strength of the U.S. housing market; Investigates the nature of bubbles and how credit investors can tell dangerous ones from those that are simply sideshows; and examines 2021 estimated corporate earnings growth—is it 24% or just 4%? It all depends on your perspective.