A Conversation with Guggenheim’s Scott Minerd—Litman Gregory Investment Forum

At our recent Investment Forum, held November 2019, Litman Gregory senior research analyst Jack Chee interviewed Guggenheim Global CIO Scott Minerd. Their conversation touched on Guggenheim’s investing approach, recession risk, the corporate bond market, the trade war, and even immigration. Here are clips of their discussion:

Building a “Slow-Thinking” Team

Drawing off Adam Smith’s The Wealth of Nations and the work of Nobel Prize–winner Danny Kahneman, Scott Minerd was the main architect of Guggenheim’s “slow-thinking” team approach.

Indian Summer

Guggenheim’s Scott Minerd likens the current market environment to an Indian summer. A return of warm weather right before winter common in the Northeast: It usually comes late … and it’s relatively short-lived.

Corporate America: Ground Zero of the Next Crisis

Overleveraged corporate America and the corporate bond market will be the ground zero of the next financial crisis according to Guggenheim’s Scott Minerd.

The Fed: The Only Game in Town?

Scott Minerd: “The source of, and solution to, every financial crisis is the central bank.”

Avoiding the Death Spiral

Guggenheim’s Scott Minerd says all you have to do is look back to 1930 and the Smoot-Hawley Tariff Act to see how a tit-for-tat trade war can escalate into a “death spiral.”

Learning from Australia

Scott Minerd discusses the need for a rational immigration policy that supports entrepreneurship and labor force growth.
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Alcentra’s Leland Hart: No Signs of the Apocalypse

In November we met with a team from Alcentra, manager of BNY Mellon Floating Rate Income. Alcentra’s Leland Hart doesn’t think we are at the end of the cycle yet based on floating-rate loans market fundamentals and the macro backdrop. What is late-cycle is investor behavior. This year, the credit markets have been starkly bifurcated, with the highest-quality segments outperforming year to date. Still, the Alcentra team thinks BB-rated loans offer the best risk-adjusted return potential right now. Loans as a whole can still trade down, but the Alcentra team doesn’t see widescale defaults like 2009 given there are few parallels to borrower characteristics before the last financial crisis.