Willow Risk Monitor November 2020
Welcome to the November 2020 overview edition of the Willow Risk Monitor, where we share our analysis of the level of risk in the current market across a variety of metrics. We also explain our thinking on how we look at and assess overall market risk, and we will often highlight what the data shows compared to what you might be hearing in the news.
At Willow, risk management is one of our key influencers in creating portfolio strategies for our clients. We hope this gives a peek into our investment management window.
Consumer Health (proprietary algorithm)
Metrics measuring consumer health continue to improve. The gap between high and low wage earnings continues to widen which, while we see much of the data as promising, still gives us pause.
Risk Assessment: Medium/Low
Manufacturing Health (proprietary algorithm)
Our manufacturing health index is back to pre-covid levels, but we still reserve some caution here as supply chains have been massively disrupted and global trade is still sorting itself.
Risk Assessment: Medium/Low
Market Volatility (proprietary algorithm)
While volatility has pulled back after a recent spike levels are still elevated vs the longer term. Many unknowns are still keeping risk premiums higher – the election transition, vaccines, COVID, geopolitics, global trade, changing demographics, climate, the list goes on…
Risk Assessment: Medium
Credit Default Swaps
CDS spreads show an easy way to gauge the cost of credit protection. While it’s been a bumpy ride, spreads have mainly returned to pre-COVID levels, having the FED as a credit market backstop definitely helps.
Risk Assessment: Low
Bond Spreads
Bond spreads continue to tighten signaling lower perceived risk in the debt markets.
Risk Assessment: Low
As always, be well and please feel free to reach out with any questions, comments or concerns.
Best regards,
The Willow Team
+1 413 236 2980
ADCM, LLC dba Willow does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. Neither the information nor any opinion expressed herein constitutes an offer or a solicitation of an offer to buy or sell securities.
