Actionable insights — "Higher for longer" (weekly SSR call)

1. The spread-relative income screen — get paid for risk, not for the risk-free rate

1. Separate a bond's yield into the risk-free rate + the credit spread, and judge cheapness on the spread, not the headline yield. Most investors buy "7% bonds" while the spread is only ~60 bps (IG) / ~305 bps (HY) — they're being paid for duration, not credit.
2. Benchmark globally: ~81% of the world's bonds yield <5% (Apollo/Torsten Slok). A 9% baby bond is ~400 bps above where the bulk of the world's debt trades.
3. Hunt the under-fished pond: small (~$200–300M) exchange-traded baby bonds and preferreds from financially sound issuers — too small for institutions, so the spread is fat. Demand a recession-survival check (issuer would need a "massive recession" to impair).
4. Compare like-for-like: a US-government-backed agency MBS at ~6.4% vs a slowing cyclical's IG bond (CAT) at 4.7% — same-or-better safety, far more yield.

• IG/HY spread percentiles vs history (multi-year tights = ignore the headline yield); new $200–300M baby-bond issues at 8%+; agency-MBS spreads near post-COVID wides.

2. Fixed-to-float preferreds — pre-position income for a "higher for longer" rate path

1. If your macro call is that short rates stay high, screen preferreds for a fixed-to-float reset: a ~7% fixed coupon that flips to SOFR + a 4–5% spread on a known date.
2. Do the reset math: with SOFR ~4% + a 5% spread ≈ a 9% dividend — and it floats up if the Fed stays high, removing the duration risk of a fixed perpetual.
3. Size the floating sleeve deliberately (here ~40% of the preferreds) so the book's income rises rather than falls if rates don't come down.

• Preferreds approaching their fix-to-float reset date; the SOFR-plus-spread coupon vs the current fixed coupon; issuers whose float kicks in while rates are still high.

3. Duration & convexity discipline — coupon and maturity beat credit quality in a rate-up move

1. When you fear higher long-end rates, rank bonds by price sensitivity (duration/convexity), not by issuer quality. The biggest price losers are low-coupon, long-maturity bonds.
2. Concretely: a 5% coupon maturing 2032 falls ~2× a 9–11% coupon maturing 2028 in the same rate move — even if the 5% bond is the "better" company (e.g. JPMorgan).
3. So skew to high-coupon, short-maturity issues; expect perpetuals/low-coupon names to move, and floating-rate 11% names to barely move absent default risk.

• Any "safe-name" bond you own out past 2030 with a sub-6% coupon — run its duration before assuming it's safe; prefer earlier maturities with bigger coupons.

4. The capex-to-cashflow inflection — buy infrastructure as the spending ends

1. Find a competitively-protected real asset (a regulated-monopoly port, pipeline, etc.) that is finishing a heavy multi-year capex program.
2. Model the free-cash-flow step-up as capex rolls off (operating cash flow flat/rising while capex falls) and compute the forward FCF yield on today's market cap.
3. Check the balance sheet for optionality: a large cash pile (here >25% of the cap) plus a low payout ratio = room to hike the dividend or buy back — the re-rating catalyst.
4. Cross-check the multiple vs global peers: a ~12% FCF yield for an asset that elsewhere yields half that implies a potential double.

• Infrastructure names exiting a build-out (capex guided sharply lower); EU/government-funded capex (95% EU-funded here) that doesn't hit the equity; the first dividend hike / buyback as confirmation.

5. The negative-enterprise-value screen — get paid to own the leftover business

1. Screen for companies that sold assets at high prices and are returning the cash via a large special dividend.
2. Compute enterprise value net of the declared payout: if cash on hand exceeds the post-dividend market cap, EV is negative — you're effectively paid to own the remaining operations.
3. Underwrite the one real risk: management redeploying the cash into a bad/overpriced acquisition. Prefer teams with a track record of selling high and waiting.
4. Frame the payoffs: a disciplined outcome (grow the rump, buy cheap, or pay another dividend) = 30–40% upside; the bad outcome = a value-destroying deal.

• Post-disposal special dividends; cash > post-dividend market cap; any M&A announcement (the thesis-killer) or a second special dividend (the confirmation).

6. The HHI antitrust screen — quantify the break risk a regulator can't justify

1. For a blocked or wide-spread merger, compute the Herfindahl-Hirschman Index (sum of squared market shares, 0–10,000) to measure how concentrated the market really is.
2. If the HHI shows a genuinely competitive market, the block is political/"emotional," not antitrust law — so the spread overstates the true break risk.
3. Watch the regulatory regime: a change at the FTC/DOJ (Khan leaving post-inauguration) is the catalyst for spreads to compress and new deals to be announced.
4. On a busted deal, re-underwrite the renegotiation: the original price is dead, but a lower topping/renegotiated bid off a depressed price can still be a double.

• Wide deal spreads where the HHI says the market is competitive; FTC/DOJ leadership changes as the spread-compression trigger; busted deals trading far below a plausible renegotiated price.

7. Policy sequencing + the prior-cycle analog — trade the order, fade the consensus winners early

1. Rank a new administration's policies by (a) importance to the president and (b) ease of implementation (executive order vs needing Congress). Tariffs/immigration go first (executive, inflationary supply shocks); tax cuts/deregulation come later (need Congress, pro-growth).
2. Map the sequence to the tape: inflationary-first → an early sell-off (Jan–Feb), pro-growth-later → a rally into year-end.
3. Overlay the closest historical analog (2016): the same trades ran Nov→Dec then reversed after the inauguration — but adjust for what's different (2024 starts at 22× P/E, 4.3% 10-yr vs 16× and 1.8% in 2016, so less fuel).
4. Act on it: trim the consensus "Trump trades" into the run rather than holding for the last dollar — be early, you don't have to catch the whole move.

• The implementation order of tariffs vs tax cuts; the Jan-inauguration reversal window; the valuation/rate starting point vs the analog cycle to size how far the trade can run.

8. Sell puts at extreme vol on a washed-out name you've cleared of fraud/bankruptcy

1. Target a name that has crashed on a binary scare (auditor resignation, delisting threat) where implied volatility has spiked to extremes (~300 vol here).
2. Do the forensic work to bound the two tail risks — fraud and bankruptcy: scale the alleged misstatement vs revenue (~$27M vs billions ≠ WorldCom/Enron), verify cash generation and debt repayment (harder to fake cash than sales, especially with a new CFO), and read the actual covenant triggers (the convertible's delisting/prepay clause).
3. Express it by selling puts to harvest the rich premium rather than buying the common — you get paid by theta and only own the stock far lower ("made the stock at a nine handle").
4. Size it tiny (a couple percent) because the binary outcome is real, and plan the exit (close at ~50% of premium before the catalyst date).

• Crashed names with extreme put vol where you can rule out fraud (misstatement size) and bankruptcy (cash/covenants); the covenant clause that's the real risk, not the headline; a defined premium-capture exit.