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Trumping Tail Risks

Christopher Joye

Coolabah Capital

In The AFR I argue that portfolio performance in 2017 will likely hinge heavily on which version of Donald Trump prevails: the aspirational entrepreneur who concentrates on the economy, delegating non-core decision-making in high-tail-risk areas like foreign policy to subject matter experts; or the impulsive and erratic megalomaniac who ushers in extreme geopolitical volatility that whip-saws markets. I also question why APRA has taken so long to determine what an "unquestionably strong" bank is; query its decision this week to set the so-called "counter-cyclical capital buffer" that is designed to protect depositors in the upswing of the credit cycle at the bottom of its 0%-2.5% range when home values and housing debt have been soaring to new record highs in absolute terms and relative to household incomes; suggest the majors' senior bonds may be cheap given their historically attractive floating-rate spreads above cash; and consider the upside and downside risks to these assets in light of rating agencies threatening to downgrade the sovereign and our banks, the expectation of ongoing capital accumulation, and a potentially benign TLAC environment...Free (VIEW LINK)


Christopher Joye
Portfolio Manager & Chief Investment Officer
Coolabah Capital

Chris co-founded Coolabah in 2011, which today runs $7 billion with a team of 33 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...

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