During the first few months of the year we’ve seen rising government bond yields and a value-led equity market rally. The Democratic senatorial victories in Georgia at the start of the year paved the way for further fiscal stimulus, and the successful vaccine rollout in the U.S. and the U.K. are largely to thank for the strong performance of markets YTD.
As of mid-April, over 37% of Americans and 58% of British adults have now received at least one dose of a vaccine. The vaccine rollout in the U.S. has seen the rate of hospitalizations from COVID-19 fall significantly from the beginning of the year, and for the first time in a long time, it seems that a return to some level of normalcy is almost within reach. Supported by recent data, investors are cautiously optimistic about economies reopening and such sentiment was reflected in the markets with a strong equity rally.
It’s hard to comprehend that it’s been over a year since global risk markets cratered as investors grappled with the notion of a global pandemic for the first time in over a century. Over the one-year period since bottoming out in March 2020, the MSCI world has rallied 79% and is now trending 18% above it’s pre-COVID-19 highs. U.S. Markets are up over 10% YTD, and the 10-year U.S. Treasury yield now stands at ~1.5%, vs. 0.5% at the low in August and 0.9% at the start of the year.
Investment grade and high yield corporate bond credit spreads, a measure of credit risk, are relatively flat in April, but have both tightened YTD and are approaching their tightest levels (lowest credit risk) in the last 5 years. A large swath of the market is due to release earnings over the coming weeks, and a meaningful pickup in new corporate bond issuance will likely follow. It’s the uptick in supply that could cause investors to take pause as they review the relative value of money center bank (JP Morgan Chase, Bank of America, etc.) yields to those available in other sectors.
While the outlook remains positive, some concerns exist given the potential for increases to corporate tax rates in the U.S. A corporate tax increase is feared to put significant downward pressure on corporate profits. It’s important not to forget that the impact of recent monetary and fiscal stimulus will likely be felt into 2022 and may act to lessen any negative impacts.
Inflation is also expected to continue to rise off of the low bases established during the spring of last year. Inflation is expected to normalize by late summer as the effects of recent stimulus winds down. Consumers have been excited and willing to spend, but may soon see the burden of high debt levels catch up and long-term secular headwinds, such as an aging population, will once again likely dampen growth. As such, inflation will likely settle again at levels below central bank targets.
Asset Class Summary
For a period of time during April, it was nearly impossible to have a conversation without a digression into the NFT or Non-fungible tokens market. What initially seemed to be something destined to be isolated to Gen Z made waves when Christie’s sold an NFT of the artist Beeple’s work for $69M in April. With traction growing for this form of asset, Sothebys and Phillips have now joined Christie’s to offer NFTs to the market. What this all means will likely still take time to determine, but the influence of technology into a very antiquated art auction market could lead to consolidation and M&A activity between auction houses and NFT trading platforms. From this, there will likely be downstream effects that impact the art financing space.
Another notable event in April was a recent Bank of America report that highlighted the growing divergence between real assets relative to equity markets. In summary, real asset valuations are at their lowest levels since 1925 relative to equity markets and investors are likely underexposed to them. As inflation concerns continue to lead the list of investor concerns, demand for real assets may begin to rise.
Like most institutions, COVID-19 closed court systems around the country. In recent months, court systems have gradually begun re-opening, however, cases are still materially backlogged causing law firms to look to bridge financing loans to cover their shortfall until expected settlements are received.
The COVID-19 pandemic and its subsequent strains on businesses is expected to result in the uncovering of years worth of corporate fraud. The legal finance industry is expecting a demand for capital to fund a wave of lawsuits over the coming years. We see some opportunities in COVID-19 related cases, similar to that of NY State vs. Amazon, in which the state has filed a lawsuit alleging the company failed to protect its workers during the pandemic.
Numerous cases have been filed as a result of the recent winter storms and subsequent power shortages in Texas. For example, there have been over 30 cases already filed in natural gas lawsuits. In a single week during the storm, natural gas sales were 5 times what they were in all of 2020, causing electricity bills to skyrocket. Unsurprisingly, these bills have often gone unpaid as the allegations of price gouging by utility companies have grown louder. If proven, settlements could be in the billions of dollars, but plaintiffs will need to be cautious as many of the utility companies won’t be able to afford the damages and may need to file for bankruptcy.
We predict that loan growth for big banks will continue to be soft until the end of June as PPP loans wind down and attention is turned to renewal season, which will likely consume most of their underwriting activities. We expect the second half of the year will see banks redirect their focus to heavy loan growth to continue to drive revenues. Banks, due to their capital reserve requirements, are very cautious around overextending credit, which means any increase in loan growth supports their optimism and is a positive for the rest of the market.
With intense pressure on banks to grow their loan volumes, this will likely lead to lower rates throughout the market as the largest lenders bid to win loans.
1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.
2 Represents a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
5 The Fund will cease investing and seek to liquidate the Fund's remaining portfolio no later than 48 months after the Fund's initial closing. It may take up to twelve months thereafter to fully monetize any remaining illiquid investments in the Fund's portfolio.
6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
7 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 8th, 2021, after deduction of management fees and all other expenses charged to investments.
8 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.
No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.
Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.
Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.
Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.
Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.
Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.
Banking services are provided by Evolve Bank & Trust, Member FDIC.
Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.
Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.