Brexit is dominating the market right now. Nobody seems exactly sure what it means—nobody can be—but most economists think it would involve an early shock and a longer-term hit to British GDP. Those of us who shudder to think what Europe (and the rest of the world) might have become without Winston Churchill can’t be too thrilled about a British exit from the European Union. This correspondent doubts that “Leave” will prevail, but odder things have happened.
I’ve still got “Hamilton” very much on my mind and I can’t help thinking of the musical interludes from King George III. His not-so-gentle scolds of the revolutionaries include the lines “You’re on your own. Awesome, wow! Do you have a clue what happens now?” from his post-war number, “What Comes Next?” While the visceral, xenophobic images of Britain inundated by foreigners have played well for the “Leave” camp, it’s hard to get away from the irony of one of the world’s great empires feeling the need to turn meekly within. It’s fighting the tape in the longer term, even if there’s some short-term momentum.
In my conversations with convertible professionals, despite the proverbial doom and gloom and cuts of recent years, things seem to be picking up. Deals are happening again. After Burr kills Hamilton, thinking his career had been wronged once too often, he sees his error in the show and sings the penultimate number, “The World Was Wide Enough.” It was wide enough for Burr and Hamilton to bring their different but unique talents to the ongoing birth of a great nation. And it’s wide enough for companies to support healthy high-yield and convertible markets with ongoing issuance, even in a zero-rate world.
Please tune in to Bloomberg radio tomorrow (Tuesday, June 21) afternoon at 4:15. I’ll be on, talking about Hillside, convertibles and perhaps even horse racing. After all, a young colt named Churchill had “his finest hour so far” over the weekend at Royal Ascot.
(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).