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      • Backed by the Fed, Corporates Borrow Record Amount

        06 April 2020   |  

        Despite the worst selloff for credit since the great financial crisis, investment grade companies set a record level of new issuance in March. The thawing of primary market activities comes just two weeks after the Fed returned to its crisis-era playbook, announcing several new emergency lending facilities to contain the fallout of the COVID-19 pandemic—including the unprecedent measure of purchasing investment grade debt in both the primary and secondary markets. Facing evaporating liquidity and a severe contraction in credit conditions, the Fed effectively moved to become the liquidity provider of last resort to facilitate price discovery, reopen primary market activity and stave off the risk of a potential credit crisis.

      • Evolution of a Crisis Response—Part 5: Market Liquidity

        03 April 2020   |  

        This is part 5 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here, part 2 here, part 3 here and part 4 here.

        Long-term, sophisticated relationships require two willing partners. By design, our client base consists of long-term, sophisticated investors in two primary groups: 66% of our AUM is from institutional clients, and 29% of our AUM is sourced through financial intermediaries—including broker/dealers, bank trust departments and financial advisors. Over the years, these two groups have adopted similar research processes for selecting their investment management partners and have asked relatively similar questions of us. As I alluded to in my last post, one of the critical recent questions we’ve been getting is how liquidity currently looks in the markets—a multifaceted question. 

      • Evolution of a Crisis Response—Part 4: The Perspective Shifts

        02 April 2020   |  

        This is part 4 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here, part 2 here and part 3 here.

        Leading a large organization during a global crisis gives you a front-row seat to clients’ and shareholders’ evolving thought processes and concerns. We started receiving questions from our clients in early March. At first, their focus was primarily on our business continuity plan—whether we have a formal plan and structure in place to allow us to continue business as usual and whether we were prepared to deploy it should circumstances warrant. Clients asked questions like: Could our employees work from home if necessary? Would our systems and existing technology support a remote workforce? As discussed in prior posts, business continuity planning has long been part of our normal operations, so we were pleased to readily answer these early questions in the affirmative. 

        Over the ensuing weeks, the questions’ tenor shifted a few times.

      • Navigating Volatility in Global Equity Markets

        01 April 2020   |  

        As the COVID-19 pandemic continues to drive heightened uncertainty and historic daily volatility, we thought an update may be appropriate. We are closely monitoring this rapidly evolving situation, remaining focused on our deep company analysis in order to understand the impacts to businesses’ growth outlooks, as appropriate. As this crisis has unfolded, companies have revised their revenue and earnings outlooks sharply lower. While supply-chain disruptions emanated from China as early as January, the economies of Western Europe and the US are just now experiencing their corresponding demand shocks.

      • Evolution of a Crisis Response—Part 3: Communication

        01 April 2020   |  

        This is part 3 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here and part 2 here.

        With our associates around the world working from home, one of the next challenges was ensuring they were all talking effectively under unusual circumstances. From a business standpoint, it doesn’t really matter if everyone is working remotely if they’re unable to maintain their standard practices and actually get their jobs done efficiently and well. Communication is paramount during periods of uncertainty—not only with and among our associates, but also with our clients and shareholders.

      • Evolution of a Crisis Response—Part 2: Mobility

        31 March 2020   |  

        This is part 2 in a series discussing Artisan Partners’ response to the COVID-19 outbreak. Read part 1 here.

        Getting a global, 400+ member workforce out of the physical offices and home is one thing. Getting them on the network and ensuring it doesn’t crash and remains secure is another altogether. So how have we done it?

      • The Decline and (Nascent) Bounce—in Pictures

        31 March 2020   |  

        An interesting tidbit: The 11 trading days between Friday, 13 March 2020, and Friday, 27 March 2020, represented the fastest shift in market history from bull market to technical bear market and back to bull market. The next closest was in 1929 but wasn’t particularly close—18 days. (HT: Morgan Stanley)

      • US Labor Market Gets Sick: Jobless Claims Soar

        30 March 2020   |  

        US initial jobless claims hit a record of 3.28 million last week. For perspective, the previous weekly record for workers filing for unemployment benefits was 695,000 in 1982 (Exhibit 1). From another angle, the latest weekly total is 1% of the entire US population and 2% of the US civilian labor force.

        Exhibit 1: US Intial Jobless Claims

        Source: St. Louis Fed, as of 28 Mar 2020. Gray bars represent recessions as defined by the NBER.

         

        Nobody can be positive what future weekly jobless claims will look like—it’s not unreasonable to call current circumstances unprecedented, epic, maybe even inconceivable. But a couple of generalizations already seem reasonable.

      • Evolution of a Crisis Response—Part 1: Introduction and Background

        30 March 2020   |  

        The recent COVID-19 pandemic and accompanying market volatility have presented unprecedented challenges for firms globally—Artisan Partners is no exception. The crisis’s rapid evolution—from the World Health Organization’s (WHO) declaration of a public health emergency of international concern on 30 January 2020, to the virus’s identification as COVID-19 on 11 February, to the WHO’s characterizing the outbreak as a pandemic on 11 March—has given the world little time to prepare. Companies who maintained ready-to-deploy, updated business continuity plans (BCP) have likely had an edge in ensuring relatively uninterrupted and seamless ongoing service.

        In late-January, it became clear COVID-19 was a risk beyond China’s borders and could pose a threat to Artisan associates traveling or working in remote locations. Accordingly, our corporate crisis management team met on 29 January to assess the situation and determine our next steps.

      • Emerging Markets Opportunities Amid Market Volatility

        23 March 2020   |  

        Global financial markets have been experiencing sharp drawdowns and extreme volatility. Although the catalysts may be unique—COVID-19 and an oil price war between Saudi Arabia and Russia—the occurrence of such dramatic turns in global financial market and economic conditions is not. We believe a narrow focus on sustainability helps account for such unpredictable periods. While we are not immune to these gyrations, we believe we are also in a period of opportunity. We continue searching for companies with sustainable competitive advantages or unique access to growth—characteristics that enable companies to persist through volatility, succeed after the dust settles, and generate alpha over the long term.