In Honor of Veterans Day and the USMC 243rd Birthday, MarketsMuse Curators extend our appreciation to all US Military Veterans, Happy 243rd Birthday and Semper Fi to all US Marines, a special salute to the battalion of sell-side broker-dealers owned and operated by Service-Disabled Veterans, and a Special Shout Out to Mischler Financial Group’s “Mischler Marine Expeditionary Force”, comprised of Managing Director, Public Finance Rick Tilghman; Senior Analyst, Capital Markets Jonathan Herrick; and Director, Portfolio Strategies Jason Klinghoffer, CFA.
OORAH! & SEMPER FII
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Newport Beach, CA & Stamford, CT – November 1, 2018 — Each year, Mischler Financial Group, Inc. (“Mischler”), the securities industry’s oldest investment bank and institutional brokerage owned and operated by service-disabled veterans, pledges a percentage of the firm’s profits to veteran and service-disabled veteran philanthropies as part of its annual Veterans Day charitable initiative. This year, Mischler is proud to announce that Army Ranger Lead The Way Fund will be the recipient of the Mischler 2018 Veterans Day Month pledge.
Established in 2007, Army Ranger Lead The Way Fund, Inc. (“LWTF”) is a 501c3 Non-Profit created in honor of Sgt. James J. Regan (“Jimmy”) who served with Charlie Company, 3d Battalion, 75th Ranger Regiment. Jimmy was killed in action while serving in Baqubah, Iraq on February 9, 2007, at the age of 26. Since its formation, the organization has been dedicated to raising funds to support disabled U.S. Army Rangers and the families of Rangers who have died, have been injured or are currently serving in harm’s way around the world. LTWF provides spouses and children of deceased, disabled or active duty Rangers with assistance for acute medical care, recovery and wellness programs, warrior transition programs and other services determined to be vital to the family’s well-being, beyond what the government can offer.
Dean Chamberlain, Chief Executive Officer of Mischler and a graduate of the US Military Academy at West Point who served as a Captain in the U.S. Army 4th Infantry Division from 1985-1990 stated, “We are grateful to the many clients of our firm who provide us with the opportunity to demonstrate our capabilities and in turn, afford us the ability to pay back and pay forward to carefully-selected philanthropies throughout the year. When paying tribute to Veterans Day, in particular, we believe that Army Ranger Lead The Way Fund meets and exceeds the objectives of our firm’s philanthropic mission.”
About Lead The Way Fund, Inc.
Army Ranger Lead The Way Fund, Inc., A 501c3 Non-Profit, Is An Active Duty, Casualty Assistance, Recovery, Transition And Veterans Organization That Provides Financial Support, Beyond What The Government And Veterans Affairs Can Offer, To U.S. Army Rangers And The Families Of Those Who Have Died, Have Been Disabled Or Who Are Currently Serving In Harm’s Way Around The World. The organization website is https://www.leadthewayfund.org/.
About Mischler Financial Group, Inc.
Mischler is a federally-certified Service-Disabled Veteran-owned Small Business (SDVOSB). Established in 1994, the firm is FINRA’s oldest investment bank and institutional brokerage owned and operated by Service-Disabled Veterans. Within the primary capital markets, Mischler provides investment banking, underwriting, and distribution of corporate debt and equities, and municipal debt issuance. Mischler’s secondary market, conflict-free capabilities extend across the U.S. and global equity markets, exchange-traded funds and the U.S. fixed income markets. Mischler also provides asset management for liquid and alternative investment strategies. Clients of the firm include leading institutional investment managers, Fortune corporate treasurers and municipal officials, public plan sponsors, endowments, and foundations. The firm’s website is located at www.mischlerfinancial.com.
High-Touch or High-Tech? That is The Question.. Virtually any industry professional will acknowledge the now two-decade evolution of financial markets whereby the electronification of equity, options, currency and even fixed income markets has been the primary catapult for business models wrapped in high-tech trading services, trading software applications and niche offerings advanced by trade execution providers throughout the global financial markets. As a consequence, “button-pushing” has displaced a myriad of traditional “high-touch” broker-dealers whose value-add had been completely dependent on human capital; professional traders who are experts at navigating markets and skilled at sourcing liquidity via networks of embedded relationships throughout the trading market ecosystem. One need only count the number of sell-side traders who have been “put out to the dinosaur pasture” to appreciate the impact of ‘progress.’ But, any industry trading technology wonk who insists they can hear the fat lady singing “the last nail is about to be placed in the coffin of high-touch trade execution”, a recent survey conducted by Consultancy Aite Groupe suggests that a significant number of buy-side managers greatly prefer high-touch to high-tech. Aite’s study is based on an online survey of 42 buyside firms throughout the second half of last year, with the majority of firms managing assets of more than $50bn.
Below excerpt from latest MarketsMedia.com story “High-Touch Hangs On in Equities” by Shanny Basar frames the story..
Fund managers still prefer high-touch, rather than electronic execution for more than a third of US cash equities and non-US cash equities according to new research.
Consultancy Aite Group said in a report Buy-Side Front-Office Trends: The ABCs of Trading Behavior that it is “mildly surprising” that high-touch execution styles are still preferred by investors for as much as 38% of US cash equities and 41% of non-US cash despite equities having the longest history of electronic trading and the earliest adoption of algorithms.
High-touch typically involves agency execution with discretion, principal/capital commitment and investors requesting a direct quote over the phone from a sales trader or passing an agency order for them to work.
“This may partially be explained by the increasing complexity associated with market fragmentation in the US equities market and the proliferation of dark pools and exchanges, all competing for order flow,” added Aite. “Average trade sizes have shrunk to less than 200 shares per trade, typically a small fraction of total order size. And at the same time, there continues to be challenges with sourcing liquidity for mid- and small-cap stocks.”
“As a result, sales traders remain relevant in assisting with trade facilitation and intermediating an agency block trade between two buyside customers with opposite sides of an equities trade.”
Sales traders are also sometimes asked to intervene in algorithmic orders, although intervention or suspension are both very rare. For example, human intervention may be required if intraday market conditions, such as extreme volatility, affect an algorithm’s performance.
However, the study also found that electronic trading continues to gain its footing across all asset classes at a steady pace across the globe. Therefore investors investors need to continue in invest in upgrading technology to find new sources of alpha, comply with new regulations, cut costs and increase efficiency. “The days of phone-based or plain vanilla chat-enabled trading are numbered,” added Aite.
However many broker-dealers have failed to keep up and have since gone the way of the Ford Pinto, there is a cadre of always-forward-thinking sell-side desks who refrained from making “all-in high tech” bets, and instead, embraced the proposition of combining the best of both high-touch and high-tech applications. According to Matt Villarreal, the head of global equities for agency-execution firm and boutique broker-dealer Mischler Financial Group, “Most thoughtful fund managers understand that risk-reward analysis applies not only to the underlying investment style or strategy, but also when mapping out execution strategies, and whenever “best execution” is a component that has to be weighed.” Added Villarreal, “Because “best execution” has become a ubiquitous phrase, every manager has their own opinion as to the meaning, often boiling down to “the right price at the right time when considering all of the factors.” The institutional managers we work with truly embrace the value of our combining bespoke, high-touch capabilities that extend across US domestic as well as international stocks, with best-in-class trading technologies in order to achieve their view of true best execution.”
Credit Markets Are More Than Just Selling Credit; Includes Giving Credit When Due: to The Women on Wall Street!
MarketsMuse Fixed Income Curator Sara Abel spotlighted a superb salute to one of the top Women on Wall Street in connection with a bond issuance brought yesterday by Citigroup which was ‘dedicated to’ International Women’s Day (IWD). Here’s the excerpt of the article, courtesy of daily debt market commentary published by minority broker-dealer Mischler Financial Group under the banner “Quigley’s Corner” and authored by Managing Director & Head of Fixed Income Syndicate Ron Quigley..
Quigley’s Corner 03.13.17 Stella Won’t Stop The Show!; Saluting Women on Wall Street
Today, our good friends at Citibank N.A. issued a 2yr FXD/FRN in honor of International Women’s Day (“IWD”), which was last Wednesday, March 8th. IWD is a global day celebrating the social, economic, cultural and political achievements of women among others. So, today it was a privilege and an honor to step aside and watch as Team Citi once again showed why they have been and continue to be a leading force for diversity in our IG dollar DCM. Congratulations to the continued collective team efforts of everyone at Team Citi! The nation’s oldest Service Disabled Veteran broker dealer sends its five-star salute to each of you and as well as to all the women in our world and lives. The seven featured Women-Owned diversity broker dealer/investment banks on today’s Citibank N.A. “IWD” deal were:
L. King & Associates
CAPIS Institutional Services, Inc.
Lebenthal & Company LLC.
MFR Securities, Inc.
Siebert, Cisneros Shank & Cop., L.L.C.
Telsey Advisory Group
Tigress Financial Partners
Why would the financial industry’s oldest (and arguably largest) minority broker-dealer owned/operated by Service-Disabled Veterans tout competing minority broker-dealers? Well, I’d ask “why wouldn’t we?!” Firstly, its the right thing to do! Second, it provides us the opportunity to showcase one of the global capital market’s leading and cutting edge D&I initiatives, while tipping our hat to the leading women in our diversity space. So, congratulations for the glass ceilings raised and doors that Citigroup has helped open at their own financial institution through their own incredible procurement initiatives, as well as externally for all these leading women-owned firms. We extend a hardy congratulations to the respective women of D&I in our financial services industry. All for one, and one for all!
So, where do all these ideas originate? A good place to start looking is from the top down at Citigroup. Today I would suggest looking first in the office of one Suni Harford….
Who is Suni Harford?
Suni Harford, Citigroup
Suni Harford is a Managing Director and Citigroup’s Regional Head of Markets for North America. In this capacity, Suni oversees the North American sales, trading and origination businesses of Citi’s securities and banking franchise. Citi maintains a premier position across all of its fixed income, currency, equity and commodities offerings. In addition to her current responsibilities, Suni is a member of Citi’s Pension Plan Investment Committee, and a Director on the Board of Citibank Canada. Suni is also the co-head of Citigroup’s global women’s initiative, Citi Women.
Prior to her current assignment, Suni was Citi’s Global Head of Fixed Income research, where she was responsible for Citigroup’s credit analytics, research strategy and fixed income quantitative analytics efforts globally. Suni also had oversight of Citi’s premier fixed-income analytics platform, The Yield Book. From 1995-2004, Suni served as the co-head of Citi’s Fixed Income Capital Markets origination business, where she managed relationships with financial institutions.
Not that she doesn’t have enough on her plate, Suni also serves on the Board of Directors of The Depository Trust & Clearing Corporation, the Board of Directors of The Forte Foundation, a national, non-profit organization dedicated to increasing the number of women leaders in business, the Board of the Friends of Hudson River Park, and the Board of Taproot Foundation, a national organization engaged in skills-based volunteerism and pro-bono philanthropy. Suni is also passionate about awareness and support for our veteran community, and she is involved in many organizations in this regard. In addition to serving on the U.S. Chamber of Commerce Veteran’s Employment Advisory Council, Suni has worked with First Lady Michele Obama’s Joining Forces initiative. Suni also represents Citi as a founding member of Veterans on Wall Street, a coalition of major financial services firms established in 2010 to engage the broader industry in efforts to support our transitioning veterans. Having helped formalize Citi’s very successful Veterans Initiative, CitiSalutes, in 2009, Suni remains the senior business sponsor for the initiative.
For those not already aware of her pedigree, Suni joined Salomon Brothers in January 1993, after five years with Merrill Lynch & Co. where she was a Vice President in Investment Banking. Suni joined Merrill upon graduation from the Amos Tuck School of Business at Dartmouth College, where she received her M.B.A. Suni received her Bachelor of Science degree from Denison University, where she majored in physics and math.
Pretty impressive stuff right there folks. Now you know why Suni Harford was named one of 2016’s Top 20 Most Powerful Women on Wall Street!
So, in light of International Women’s Day and today’s honorable $2b Citibank N.A. “IWD” two-part new issue a “thank you”– not only to Suni, but to all the women in our investment grade debt capital markets and in our lives in addition to those who help perpetuate a more inclusive financial services industry.
Before I conclude, a bit of Women-on-Wall Street trivia for you from the guy-in-the-corner’s personal treasure trove –
to continue reading, please visit the 13 March edition of Quigley’s Corner investment grade corporate debt commentary via this link
MarketsMuse Fixed Income Curators have been keeping tabs on the seemingly insatiable and outsize demand for yield and in particular, the demand for IG Corporate Bonds aka investment grade corporate debt. With that, we roll to opening excerpt of Aug 9 notes from “Quigley’s Corner”, the financial industry award-winning commentary produced by Ron Quigley, Head of Fixed Income Syndicate for boutique investment bank/institutional brokerage Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans..
Today things slowed down a bit for the IG dollar DCM but it was still a formidable line-up. We featured 5 IG Corporate Debt issuers that priced 9 tranches between them totaling $7.66b. The Asian Development Bank priced its expected two-part 3s/10s new issue in the SSA space that totaled $1.3b bringing today’s all-in IG tally to 6 issuers, 11 tranches for $8.96b.
WTD we have now priced 85% of the syndicate midpoint average forecast for the week or $19.46b vs. $22.80b. MTD we eclipsed the syndicate estimate for the month after only 7 sessions or $68.41b vs. $61.13b.
The big deal of the day in the IG Corporate Debt space was Duke Energy Corp. $3.75b 3-part 5s/10s/30s issued to finance a portion of costs in connection with Duke’s acquisition of Piedmont Natural Gas Company Inc. Last week Duke Energy (NYSE:DUK) announced it mandated Barclays, Credit Suisse, Mizuho, MUFG Securities and UBS as joint leads to arrange investor calls after which a transaction could soon follow. As has been written in the “QC” pipeline for a while, on Friday, January 22nd, shareholders of Piedmont Natural Gas (A2/A) voted to approve the Company’s acquisition by Duke Energy (A3/BBB+). 66.8% of voting shares supported the acquisition. In late October 2015, Duke Energy, (A3/BBB+) the nation’s largest utility, announced that it will buy Piedmont Natural Gas (A2/A) for $4.9b in cash. Both companies are partners in the $5b Atlantic Coast Pipeline. The purchase adds one million new rate payers to Duke Energy’s customer base. Congrats to Duke!
Rates on the Rise?…Think Again.
Today the U.S. Treasury held a 3-year notes auction. It was one of the strongest in years. Investors or buyers, for that matter, fly into the safety of USTs motivated by fear and desire for safety. No one flies into 3yr Notes for the 0.85% yield. You want my money? Let’s talk about 5-8% and we can discuss it. So, when I heard the 3yr auction was so wildly successful I pulled up a chair next to my rates guru Mr. Tony Farren to discuss the matter. Here are the prescient takeaways:
The auction stopped thru 1.2 bps which is a big stop for a 3yr auction.
Dealers bought 33.7% of it versus the 6-month average of 38.2%.
The bid-to-cover or oversubscription rate was 2.98x versus the 6-month average of 2.76x.
Bidders at the auction yield (stopped 1.2 bps thru) only received 54.18% of their size bid for (so, if you bid for $100mm you only wound up buying $54.18mm).
What does it all mean? Lower-for-longer. The Fed is not raising rates anytime soon folks. Taking rate volatility off the table means dive int the stock market readers. Get back in now.
To read the full (excerpted edition) of Aug 9 edition of “Quigley’s Corner”, please click here
May 12-Stamford, CT–Mischler Financial Group (“MFG”), the financial industry’s oldest minority investment bank and institutional brokerage owned and operated by Service-Disabled Veterans, announced today that in recognition of the upcoming Memorial Day celebration, the firm has pledged a percentage of its entire May profits to Veterans Education Challenge, (VetEdChallenge) a donation-based crowdfund campaign. The philanthropic initiative is dedicated to providing need-based college scholarships to ex-military students pursuing higher education so they can get better access to a broad range of career development opportunities.
Veterans Education Challenge was established in November 2015 by investment management industry veteran Bruce Richards and his wife Avis. Mr. Richards is personally matching the first $1million in donations made to the VetEdChallenge campaign via crowdfund platform “Crowdrise.” He is co-founder, CEO and managing partner of Marathon Asset Management, the $12.5 billion investment firm specializing in global credit and fixed income markets.
“This Memorial Day Month we’ve embraced a more contemporary approach to paying it forward via the VetEdChallenge program”, said Mischler Financial Group CEO Dean Chamberlain, a graduate of the U.S. Military Academy at West Point who himself earned his MBA via a work-scholarship program at Northwestern University’s Kellogg School of Management. “Our annual, entire month of May pledge in honor of Memorial Day, as well as our annual Veteran’s Day Month pledge has typically focused on traditional, best-in-class philanthropies and we believe the VetEdCballenge is an ideal vehicle to directly impact the future of returning veterans, as higher education can provide a material lift in the course of pursuing opportunities.”
Added Chamberlain, “Because we are always mentoring returning veterans, we know first-hand about the challenges these men and women face as they assimilate back into the mainstream and find themselves working multiple jobs to put aside funds for educational degrees beyond their pre-military academic background. We’re proud to partner with Bruce Richards and be affiliated with his truly thought-leading program. We encourage our institutional clients to help us support this initiative via our trading desk(s) and/or directly via theVeterans Education Challenge crowdfund program.“
Other philanthropic organizations that Mischler Financial Group supports are displayed on the firm’s website via this link.
To kick off the 2016 debt market outlook, MarketsMuse fixed income curators are looking forward to the next Caribbean boondoggle, and in that spirit, we extend a shout out to Ron Quigley, one of the primary debt capital market’s top pulse-takers who also goes by the title Head of Fixed Income Syndicate for boutique investment bank, Mischler Financial Group, the financial industry’s oldest certified minority brokerdealer owned and operated by service-disabled veterans. Mischler was the 2014 and 2015 winner of the Wall Street Letter Award for Best Broker-Dealer Research, Quigley’s Corner is a bell-weather for the corporate bond market. Below comments come from the 04 January 16 edition of Quigley’s comments..
Expect a volatile year with today setting quite the tone to kick things off. The Shanghai Index finished the session down 6.86% with the Shenchen off 8.2%. A 5% plunge triggered first-time trading halt circuit breakers as panicked investors piled on sell orders further steepening declines. The weaker yuan, manufacturing misses and the lifting of a ban on sales by major shareholders all combined to create a perfect storm for disruption on our first day back.
Taking back seat to China’s equity exchange turmoil was a critically important development in MENA in which Saudi Arabia officially cut all diplomatic and commercial ties with Iran. Saudi Foreign Minister Adel al-Jubeir requested the departure of delegates in diplomatic missions of the embassy and consulate and related offices within 48 hours. All flights to and from the Saudi Kingdom were immediately cancelled while Bahrain and Sudan joined in severing ties with Iran as well. The Saudi’s move makes one think twice about the U.S.-Iran nuclear deal that will provide the cradle of Islamic Extremism with a cash windfall as sanctions are eased and assets up to $150 billion become unfrozen. Let’s put that amount into proper perspective readers – that’s $25.7 billion MORE than the $124.3 billion the U.S. has given to Israel…..since 1948!
In reaction, the DOW opened down 400 points and as much as 467 intra-day – the worst start for the DOW in 84 years (1932) – and that, readers was all she wrote today for primary markets to decide to prudently stand down. It should be noted, however, that the DOW was strong into the close gaining back 191 points. We WILL revisit things tomorrow. Half a dozen issuers stood down today so if market tone is neutral overnight tomorrow could be a big day.
I couldn’t help but notice how many market participants and think tank experts talked about how those expecting a calm and quiet opening day to the New Year were in for a rude awakening today. If you didn’t already know that this year was going to be highly volatile, then you might want to re-think your entire annual outlook. There is nothing in the global landscape that should tell anyone otherwise. Get used to days like today.
As one of my friends and former colleagues, who is also the author of 18 books on geopolitics and currently Senior Managing Director and Chief Economist at KWR International, Inc., Dr. Scott MacDonald exposed recently that there is a significant rise in holdings of Caribbean Banking Centers (CBCs). Although record amounts of USTs have been issued, CBCs rank as the world’s third largest foreign holders of USTs behind Chinese and Japanese investors. A close fourth place is occupied by the major oil exports namely Saudi Arabia, Qatari and UAE, etc. CBC’s are defined as the Dutch isles, Britain’s Caribbean territories, the Bahamas and Panama. What it spells are very high net worth individuals and families desperately searching for safe harbor investments.
CBC’s currently hold around $322 billion which is a new high. It was only $37 billion at the end of 2000. The reasons are clear – global volatility is pushing investors into the flight to quality of U.S Treasuries compounded by the fact that the U.S. pays higher rates and with a much more palatable risk-to-growth proposition and a Fed that just increased rates last month for the first time in nine years while hinting at more. What it points to is a boat load of global market volatility and risk, aversion to a junk bond market that nearly saw its bottom fall out in late 2015, liquidity issues in corporate bond markets all on the back of our fragile and inextricably linked global economy that has lots of hotspots that can boil over on a day’s notice. As Dr. Scott put it, “perhaps the Caribbean numbers point to the need to have your crash helmet ready for 2016.”
Germany reminded us of mounting economic woes facing the EU. This morning, the engine that drives Europe posted disappointing consumer prices of 0.2% against 0.4% forecasts. The ECB stands ready to print lots more funny money to bolster the faltering Union. Given hammered commodity prices, oil at $36+ per barrel and severed ties between Saudi Arabia and Iran, it’s pretty clear to see that expectations for European inflation aren’t very realistic.
What’s Ahead for 2016?
Well, I can tell you we hope to see more deals, which in turn, will mean more deal drill-downs and wonderful Diversity & Inclusion stories. Those go without saying. However in the world of waxing poetic on all things geopolitical, I’ll have lots of opportunities when there is time to expound therein. Here are merely some of the mounting stories, getting worse NOT better, that I’m sure we’ll hear about in the “QC” in 2016 and in no particular order:
Spreading EU Nationalism.
France’s alliance with Putin Incorporated.
Potential superpower proxy war over Syria.
A MUCH worse Brazil than we saw in 2015…….which was pretty bad.
The ECB’s pursuit of its elusive 2% inflation target resulting in yet more stimulus.
The mounting debate and nervousness over a potential Brexit as the U.K. votes in June.
Expanding Terrorism organizations and more serious attacks to come to Europe and the world.
More intrigue in China’s expansion in the South China Sea and subsequent international friction.
Turkey in the EU? Germany will gladly give Turkey what it wants to stem the flow of MENA immigrants into the EU.
Slow growth China and the mere “potential” of civil strife in a nation of 1.4 billion or 19+% of the global population.
Mounting Sunni-Shiite war throughout the Saudi Kingdom and Iran may push those two powers toward direct confrontation.
……….and lastly but not least to all of us, the best story out there, namely the flight to quality into investment grade-rated U.S. Corporate bonds.
The EU Immigration fiasco, the Schengen Agreement and tightened/reintroduction of European borders – a weakening foundational issue to the success of the EU.
………..Stay tuned, she promises to be quite an unprecedented and dramatic year in many respects.
MarketsMuse extends a warm salute to the nation’s oldest and largest minority brokerdealer owned and operated by service-disabled military veterans in connection with the following news announcement..
Oct 5 2015–Stamford, CT and Newport Beach CA–Mischler Financial Group, Inc., the financial industry’s oldest and largest institutional brokerage and investment bank owned and operated by Service-Disabled Veterans is pleased to have served as a Silver Sponsor for the 2015 Army Ranger Lead The Way Fund Gala. Silver Sponsors contributed a minimum of $25,000; proceeds to
are dedicated to support service-disabled US Army Rangers and the families of Rangers who have died, have been injured or currently serving in harm’s way around the world.
This year’s annual gala took place September 30 at New York’s Chelsea Piers and NBC News Anchor Tom Brokaw served as Master of Ceremonies. The 2015 Lead The Way event paid tribute to 5-time NCAA champion and college basketball legend Mike “Coach K” Krzyzewski, a US Military Academy at West Point Graduate (USMA ’69) and a former classmate of Mischler’s Founder and Chairman Walt Mischler. Coach K served two tours of duty prior to his career as a world famous university basketball coach.
Mischler Financial’s VP of Capital Markets Robert MacLean (USMA ’02), who served seven years as a US Army Ranger and is a two-time recipient of the Bronze Star, served as a member of this year’s Lead The Way Fund Host Committee. MacLean shared that honor with a short list of military veterans who have since forged a path on Wall Street at firms that include among others, Goldman Sachs, JPMorgan, UBS, Credit Suisse, Barclays, and Fortress Investment Group.
MarketsMuse Fixed Income Update “Corporate Bond Market- Balancing on a Knife Edge” is courtesy of extract from the 10.02.15 weekend edition of “Quigley’s Corner”, a daily synopsis of the investment grade corporate bond market and rates trading space authored by Ron Quigley, Managing Director of investment bank and institutional brokerage Mischler Financial Group, the financial industry’s oldest and largest minority brokerdealer owned and operated by service-disabled military veterans. Mischler Financial was selected in 2014 and again in 2015 for the Wall Street Letter Award “Best Research-Brokerdealer”
Blackouts couldn’t be more optimally timed as we experience massive re-pricing in our IG primary credit market. The corporate black-outs are serving as an unplanned, well-timed inherently built-in “kick-the-can” that is necessary in helping us to all buy time as we navigate thru what is perhaps the most unpredictable, treacherous, volatile and uncertain time that our primary markets have experienced since 2008. As one very senior syndicate source told me “the credit markets are sitting on a knife’s edge.” IG spreads are on the whole 44 bps wider at the end of the third quarter according to Morgan Stanley.
Today’s notoriously and unexpected poor employment data was the last thing credit markets needed and it has instigated a massive Treasury rally. Perhaps this is a bit of good news because when both are combined, is a potential high velocity tailwind to credit products from big government bond funds. However, that’s “if” funds want to own credit product and hold it for an extended period of time and potentially wear a negative mark-to-market.
Having said that, the guy-in-the-corner suggests that at some point this weekend, you should put on your favorite song and sing along to it after many shots of tequila. When you get to the point of feeling bad, look at yourself in a mirror and realize that you can begin to feel better with coffee, food, sleep and time but come Monday morning the business model you are used to is about to change. Not adapt; not get better; rather change. The trends in the credit markets that we have seen over the last two quarters are showing no signs of abating, and in some degrees, worsening.
Now please let me introduce the moment you’ve been waiting for..
Syndicate Forecasts and Sound Bites from “The Best and the Brightest!”
I am happy to report that once again the “QC” received unanimous participation from all 23 syndicate desks surveyed in today’s Best & Brightest polling. That includes all of the top 22 ranked syndicate desks according to Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table that can be found on your terminals at “LEAG” + [GO] after which you select #201 (US Investment Grade Corporates). Their cumulative underwriting percentage is 94.00% of YTD IG dollar debt underwriting which simply means they’re the ones with visibility. But it’s not only about their volume forecasts, rather it’s also about their comments! This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.
*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.
The question posed to the “Best and the Brightest” early this morning was:
“Good morning! So, this week the massive repricing in primary markets saw average NICs bust out to 54.23 bps; bid-to-covers shrank to an average 2.02x; today’s numbers were BAD; Obamanomics is quite the engine of growth and job creation, China’s slowdown is showing up in our data (ISM Milwaukee posted its worst manufacturing number since the dot com bubble). Spreads are wider on today’s data to start. Lower-for-longer might just be lower forever! The two-part question for today is what are your volume forecasts for IG Corporate supply for BOTH next week AND October? It’s going to be challenging to nail that down but it’s an important survey at this critical juncture. Many thanks, Ron”
Messing With Data aka When “Art” Smashes into “Science” in Wall Street’s Version of the Hadron Collider
MarketsMuse Fixed Income update comes consequent to the Fed’s June 5 release of Employment Data, and below is courtesy of extracted comments delivered to institutional clients of Mischler Financial Group under the banner “Quigley’s Corner” and authored by Managing Director Ron Quigley, Head of Fixed Income Syndicate for the securities industry’s oldest and largest minority firm owned and operated by Service-Disabled Veterans. Mischler has been awarded “Best Research-BrokerDealer” for the past two years by The Wall Street Letter.
The large Hadron Collider in Geneva’s CERN Institute or the European Organization for Nuclear Research took ten years to build. It’s the largest single machine on our planet. 10,000 scientists worked on it from 100 countries. Talk about diversity and inclusion! It rests as deep as 825 feet underground and its circumference is 17 miles. It was created, in essence to help find answers to questions that have bugged mankind like “where do we come from?” or “How was the universe started” among many others. CERN hires roughly 90% of the world’s particle physicists otherwise known as the smartest people on earth. My late father-in-law was its director and worked there for over 40 years. They are exacting people, detail oriented and with no room for error. Which leads us into today’s Op-ed concerning U.S. economic data and its vast differences but equally important impact in today’s inextricably global-linked world economy. Like the circular Hadron collider – what goes around comes around. So, what happens with rates, the EU, Greece, China and Ukraine, terrorism and/or Nationalism can all have an explosive domino effect. Given that our current rate situation seems tenuous with equally profound global ramifications, I thought the analogy appropriate. Continue reading →
MarketsMuse.com ETF update is courtesy of exclusive reporting by Todd Shriber of ETFtrends.com with a tasty title:
No Burritos for ETF Investors as Funds Skimp on Chipotle
Shares of Chipotle (NYSE: CMG) have risen more than fivefold over the past five years. That performance and an almost $700 price tag solidify Chipotle’s status as storied, once-in-a-lifetime consumer discretionary growth stock on par with Netflix (NasdaqGS: NFLX) and Priceline (NasdaqGS: PCLN).
However, with Chipotle set to deliver its first-quarter earnings today after the close of U.S. markets, exchange traded fund investors are reminded of the difficulties of accessing the burrito maker’s shares via ETFs.
Just two ETFs feature Chipotle as a top 10 holding, according to S&P Capital IQ data. The PowerShares Dynamic Leisure and Entertainment Portfolio (NYSEArca: PEJ), which in the past has garnered weights of roughly 5% or more to Chipotle, currently does not own shares of the stock.
Lack of ETF access to Chipotle is punitive given the company’s penchant for delivering blow-out results.
“Consensus estimates call for EPS of $3.64, vs $2.64 a year earlier (+38%). The company has beat estimates in the past three quarters. Consensus for all-important comparable-store sales is +11.6%. This compares with with +16.1% in the fourth quarter of fiscal 2014. The other metric to watch out for is gross margin – in the fourth quarter, food costs grew 110bps and held back margin progression,” said Mischler Financial Group analyst Neil Currie in a note out today.
“Regarding comp-store sales, we think there is some potential for consensus to be beat. While the consensus estimate would represent a two-year stack of +25.0%, similar to Q4, we think three-year stacks have proved an important metric for CMG. Based on this consensus, the three-year stack would be +26.0%. This compares with around +30.0% for the past three quarters. It is conceivable that CMG’s reported comp-store sales could reach the 14-15% mark on this basis,” adds Currie.
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MarketsMuse.com Fixed Income Fix update is courtesy of extract from 06 April commentary from Mischler Financial Group’s “Quigley’s Corner”, Wall Street Letter’s 2015 winner of “Best Research-BrokerDealer.”
How Low Will Greece Go?
When one broaches the subject of German war reparations, it opens up perhaps modern civilization’s most sensitive human drama to one-sided debate. But when the cries come from the Hellenic Republic, it also points to an audacity on the part of Greece to hold back nothing for money. Is it a callous, cowardly blackmail of Germany or is it an appropriate claw-back provision? You be the judge, I am merely putting it out there. Last March, Alex Tsipras accused Germany of reneging on World War II compensation owed his nation by Germany which occupied his country from the year 1941 thru 1944. Angela Merkel’s office reiterated several times that Germany had made good on those payments – end of story! Clearly a case to stir up emotions against Germany and to garner support from laggard nations like France and Italy to secure additional financial recompense and negotiation leverage for the nearly bankrupt Greece. Continue reading →
MarketsMuse update courtesy of debt capital markets desk notes distributed to clients of boutique brokerdealer Mischler Financial under the banner “Quigley’s Corner”. Mischler Financial, the financial industry’s oldest and largest minority firm owned/operated by Service-Disabled Veterans received the 2015 Wall Street Letter Award for Best Research/BrokerDealer.
Well, it’s finally Friday and every Friday is a Good Friday! So, let’s take a look back at the amazing week the investment grade corporate debt market has just concluded.
This week was the second busiest in history for all-in IG volume (Corps+SSA) at $65.03b.
It is now the fourth busiest all-time as measured by the number of individual tranches priced for all-inIG Corporate plus SSA issues with 63tranches priced.
In terms of IG Corporate only supply the week’s $54.03bn ranks 5th all-time in that category.
Market tone remains firm with CDX IG23 at a new low this morning of 60.12.
The DOW and S&P are hovering around all-times highs both set this past Monday.
Deals are performing well, NICs remain skimpy averaging 3.16 bps across this week’s 59 IG Corporate-only prints and demand is very strong with those 59 issues averaging a 3.55x bid-to-cover rate.
The U.S. NFP number was upbeat blowing by estimates or 295k vs. 235k and the EU will be purchasing assets launching EU QE as early as Monday’s session.
The average spread daily compression across today’s 59 IG Corporate-only new pricings was 16.28 bps from IPTs to the launch.
Spreads across the 4 IG asset classes are an average 21.00 bps wider versus their post-Crisis lows and versus 23.50 last Friday or 2.50 bps tighter on the week!
Spreads across the 19 major industry sectors are an average 25.32 bps wider versus their post-Crisis lows and versus 28.21 bps last Friday or 2.89 bps tighter!
BAML’s IG Master Index was unchanged at +131 versus yesterday but 6 bps tighter versus last Friday’s +137 although rebalancing took place thanks to Petrobras being dropped due its high yield rating.
Standard & Poor’s Global Fixed Income Research was at +171 versus +173 one week ago or 2 bps tighter.
Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 63 deals that printed, 51 tightened versus NIP for a 81.00% improvement rate while only 4 widened (6.50%), 7 were trading flat (11.00%) and 1 was not available (1.50%).
Below is courtesy of Feb 23 commentary from “Quigley’s Corner”, aka debt capital market observations from Mischler Financial Group’s Head of Fixed Income Syndicate, Ron Quigley. Mischler Financial Group is also an award winner; a panel of industry judges assembled by financial industry publication Wall Street Letter voted to award the firm “WSL 2015 Award for Best Research/BrokerDealer.”
The Big Four Central Banks as the World’s Fastest Growing Asset Class
I had a wonderful conversation over dinner this weekend with a highly intellectual and personable Russian player in our markets. We discussed Greece and the additional overtime round of “kick-the-can” that postpones pain by four more months. But what seemed even more compelling was the notion of the Big Four Central Banks as the world’s fastest growing “asset class.” (The Fed, the ECB, BOJ and PBoC). Deutsche Bank illustrated in a recent research piece, the staggering numbers of Big Four Central Bank purchases. The Central Banks have clearly become an asset class all its own. It’s right up there the with cumulative total of U.S. pension funds! Digest that for a second readers! As my friend wrote to me: Continue reading →
MarketsMuse fixed income fix for Feb 5 is courtesy of Industry Veteran and debt capital markets guru Ron Quigley, Managing Director and Head of Fixed Income Syndicate for Mischler Financial Group, the sell-side’s first and foremost investment bank/institutional brokerage boutique that is owned and operated by service-disabled veterans. Mr. Quigley is also the author of “Quigley’s Corner”, a daily debt capital market commentary distributed to 1000+ Fortune treasurers, investment managers and public plan sponsors. Mischler Financial Group is the winner of the 5th Annual Wall Street Letter Award for “Best Broker-Dealer/Research”
The Guy-in-the-Corner’s Take on Interest Rates (Feb 4 Quigley’s Corner)
So, I was asked by a Senior Managing Editor of an anonymous multi-billion dollar global financial news operation for my thoughts on interest rates. When I began my response to him, it just seemed to continue as there are so many factors that influence that discussion. My response turned out to be a feature unto itself so without further ado, I thought I’d feature it in today’s “QC.”
As concerns your question about how recent jumbo deals (think “Apple”) have raised speculation of interest rates rising, there is a POV out there claiming issuers are quick to print in anticipation of higher rate action. I, however, lean the other way…….FAR the other way and here’s why:
I have always been a proponent of “lower-for-longer”. Yellen added language in her last minutes flagging the EU as a potential impact on keeping U.S. rates lower. In the prior minutes, she didn’t mention the EU at all (which I thought was egregious not to at least mention the worst and most impactful economic story on our planet).
o On any given day a slew of news would be headliners in their own right. Aside from MENA unrest and the dramatic ISIS killings and impact in the world’s most sensitive hotbed – MENA – there are myriad factors that can all impact our rate environment:
o The Swiss National Bank’s action to remove its cap with the euro is a red flag or bad sign to the markets. It means the Swiss (unknown for surprises and bastions of stability) do not like what they see in on the horizon for for the EU. Did someone say “currency wars?” Remember history and NEVER forget it. We are dealing with severe currency volatility between the USD, EURO, YEN et al. These are reminders of the economic dislocation circa the 1930s……and we know what that led to. Continue reading →
Mischler Financial Adds To International Equities Team;
Global Bank Trading Veteran Appointed to Senior Role for 24/6 Agency-Only Platform
Immediate News Release
Stamford, CT July 14, 2014—Mischler Financial Group (“MFG”), the securities industry’s oldest investment bank/institutional brokerage owned and operated by service-disabled veterans announced that Eric Michalisin, a close on 20-year sell-side industry veteran and a recognized specialist in international equities execution has joined the firm’s agency-only trading desk and has been appointed, Director, International Equities Sales/Trading. Mr. Michalisin will be based in the firm’s Stamford, CT office and work directly with Managing Director Rob Livio, who oversees the firm’s 24/6 international equities sales/trading platform.
During the 3 years immediately prior to joining Mischler, Mr. Michalisin was Director, International Equities for RBS Securities. During the 7 years prior, he was a senior member of the international equities desk for JP Morgan Chase. Mr. Michalisin began his sell-side career in 1996 as a Far East equities sales/trading specialist for Robert Fleming, Inc and remained with predecessor firm Jardine Fleming Securities throughout 2001.
Noted Joe Digiammo, Mischler’s global head of equities, “Eric’s major firm background, coupled with his unique insight to local market trading, as well as best execution for US-listed ADRs provides our institutional clients with yet another highly-experienced touch-point for those seeking to navigate global equities markets on a 24/6 basis.”
ETF Trends’ Tom Lydon makes a poignant observation when pointing out that MUB , iShares S&P National Municipal Bond Fund ETF is continuing to trade at a discount to its NAV, which for some, is a disturbing bearish signal.
While ETF “discount trading” is not necessarily unusual in and of itself, prolonged disparities (i.e. for more than a brief snapshot in time) often infers a bearish sentiment. When counting the growing number of municipalities raising their hands for more help and the loom of local financial crisis episodes remains large, its no wonder that the bears are growling.
That said, Ron Quigley, head of fixed income syndicate for Mischler Financial Group was alone last week when he said: “.. The Federal Reserve Bank said today they’d leave rates at “current low levels through 2014” which simply means that as the economy grows and inflationary fears increase, the long end of the curve will rise. A steeper yield curve will expedite the process by which the banking system recapitalizes, thus encouraging banks to deploy their excess capital and profits into even more SMEs and consumer lending to fuel more growth
Whichever economic analyst camp you prefer to reside in, MUB’s technical chart is decidedly bearish at the moment. Click on the image to read Tom Lydon’s perspective.
It’s a big bowl of alphabet soup when it comes to quenching your appetite for fixed income ETFs. On today’s menu you’ll find that a small smorgasborg of just these alone will get you through the first of several courses: EUO, UUP, ELD, XLU, IDU.
There’s not enough room right here to go into further discussing which of the above fixed-income-flavored ETF(s) will work best, it all depends on which US or geopolitical scenarios you’re trying to feed into. That said, what Ron Quigley says –he’s Mischler Financial Group MD & Head of Fixed Income Syndicate– pretty much sums up what every primary market players’ perspective is this week: “Its good to be selling bonds!!”
Multi-Currency, Sovereign..Utilities..You name it, and the new issuance market says “they’re buying it!”
Reprinted without permission, here’s a 2 paragraph excerpt from tonight’s missive from Quigley to his institutional fixed income patrons:
“..With Consumer Confidence reaching a four-year high coupled with the Greek PSI close to achieving a 85% to 90% participation rate, issuers rode market momentum into what was another prolific day for primary markets. In total, 11 issuers tapped the dollar markets pricing 16 tranches totaling $8.17 billion. Thus far the weekly total is $48.55 billion, already placing it as the 3rdbusiest week in history! With two days left to go, the record of $52.5Bil record may fall. Among today’s diversified group of issuers were two regulated utilities for Southern California Edison and Consolidated Edison….”
You’ll want to contact Ron directly to see his complete market updates..And, you’ll want to dig into the latest market data behind the above-noted tickers to get the fix you’re looking for.