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Moody's Analytics Insights

Article
Image of NY Stock Exchange building and Wall Street sign

Weekly Market Outlook: Upside Risks to the U.S. Economy

The U.S. economy has weakened in early 2019, fanning concerns that the expansion is running out of steam. However, a number of factors that are contributing to this apparent downshift are temporary.

April 2019
John Lonski,  Katrina Ell, Veasna Kong, Barbara Teixeira Araujo, Brendan Meighan,  Ryan Sweet, Michael Ferlez, Andrew Pak, Adam Ozimek

Article
illuminated charts and graphs

Weekly Market Outlook: Outstandings and Rating Changes Supply Radically Different Default Outlooks

The credit ratings distribution of outstanding U.S. high-yield corporate bond debt and the distribution of high-yield credit rating revisions now deliver conflicting messages regarding the high-yield default rate's likely direction.

April 2019
John Lonski, Yukyung Choi,  Katrina Ell, Barbara Teixeira Araujo,  Ryan Sweet, Brendan Meighan, Steven Shields

Whitepaper
Stock Market Graph and Bar Chart

Earnings Volatility, Share Price Performance, and Credit Portfolio Management Under CECL and IFRS 9

In this paper, we study how earnings volatility induced by credit risk can impact share price performance for financial institutions under CECL and IFRS 9, and we quantify the benefit of an active credit risk management practice. Our study uses empirical data to show that a 1.0% increase in earnings volatility leads to a 15.6 bps decrease in equity value. When we look at the earnings volatility components, we find that a 1.0% increase in the volatility of change in the loss allowance leads to a 6.0% bps decrease in equity value, while a 1.0% increase in the volatility of net charge-offs plus writedowns leads to a 10.5 bps decrease in equity value. This finding suggests that credit risk managers who diversify holdings and reduce earnings volatility without lowering profitability can increase shareholder value.

April 2019
Dr. Amnon Levy, Xuan Liang, Dr. Pierre Xu

Article
Graphic charts and figures on illuminated board

Weekly Market Outlook: High Leverage Offset by Ample Coverage of Net Interest Expense

The faster growth of nonfinancial-corporate debt relative to both nominal GDP and the group's core pretax profits has been offset by the comparatively slow growth of net interest expense.

April 2019
John Lonski, Yukyung Choi,  Katrina Ell, Barbara Teixeira Araujo,  Ryan Sweet

Article
Image of red painted staircase

Weekly Market Outlook: Subdued Outlooks for Revenues and Profits Portend Lower Interest Rates

Recession fears abound yet the prices of earnings-sensitive securities and industrial commodities have held up reasonably well. Indicators of financial distress have yet to warn of sharply lower share prices and a surge in corporate debt defaults. Apparently markets are confident in the remedial powers of lower interest rates.

March 2019
John Lonski, Yukyung Choi,  Katrina Ell, Faraz Syed, Barbara Teixeira Araujo,  Ryan Sweet, Michael Ferlez

Webinar-on-Demand
Business and financial report

Moody's Analytics Webinar: The Changing Landscape for Model Risk Management

Regulatory compliance has significantly altered the model development and validation landscape, while increasing the amount of data to be validated.

March 2019
Anamaria Pieschacon, Irina Baron, Michael Denton

Article
illuminated charts and graphs

Weekly Market Outlook: Fed Will Cut Rates If 10-Year Yield Breaks Under 2.4%

The Treasury bond market was stunned by the drop in the Federal Open Market Committee's “dot chart” projection for year-end 2019 fed funds' midpoint from the 2.875% of December 2018's projection to 2.375% as of March 2019's projection.

March 2019
John Lonski, Yukyung Choi,  Katrina Ell, Barbara Teixeira Araujo,  Ryan Sweet, Michael Ferlez

Article
Graphic of financial indicators

Global Outlook: Weaker Growth, Pervasive Downside Risks

Global economic growth has passed the peak and is transitioning to a slower pace after being on an upswing for more than two years.

March 2019
Steven CochraneKatrina Ell, Ruth Stroppiana

Article
Image of city buildings and sky

Weekly Market Outlook: Riskier Outlook May Slow Corporate Debt Growth in 2019

The latest version of the Federal Reserve's “Financial Accounts of the United States” was released on March 7. As of 2018's final quarter, the total outstandings of private and public nonfinancial-sector debt grew by 5.1% year-to-year to a record high $51.796 trillion.

March 2019
John Lonski, Yukyung Choi,  Katrina Ell, Barbara Teixeira Araujo,  Ryan Sweet, Michael Ferlez

Whitepaper
Image of business people's hands holding and looking at printed charts and graphs

Toward SCCL Compliance: Key Implementation Challenges

This whitepaper focuses on the main challenges for SCCL compliance, and offers a hypothetical SCCL solution, while discussing strategic and tactical considerations.

March 2019

Article
illuminated charts and graphs

Weekly Market Outlook: Replay of Late 1998's Drop by Interest Rates May Materialize

Weakness abroad and a faltering demand for U.S. output now put downward pressure on both earnings-sensitive securities' prices and benchmark Treasury yields. The equity and high-yield credit rallies will be put on hold until the earnings outlook stabilizes.

March 2019
John Lonski, Yukyung Choi,  Katrina Ell, Barbara Teixeira Araujo,  Ryan Sweet, Michael Ferlez

Article
Federal building columns

Weekly Market Outlook: Moody's Yield Averages Enter Their 100th Year

Two milestones will be arrived at in 2019. First, but not necessarily the foremost, Moody's corporate bond yield averages will record their 100th anniversary in 2019.

February 2019
John Lonski, Yukyung Choi,  Katrina EllSteven Cochrane, Barbara Teixeira Araujo,  Ryan Sweet, Michael Ferlez