Western Asset Managed Municipals Fund · NYSE:MMU
Western Asset Managed Municipals Fund — Western Asset Management Company — Investor Presentation (December 2016)
15 slides from Western Asset Managed Municipals Fund's investor presentation, Dec 14, 2016
Slide 1: Finding Opportunity Amidst Hope, Doubt, and a New US Administration
Biographies Thank you for joining our webcast, Finding Opportunity Amidst Hope, Doubt, and a New US Administration with Deputy CIO Michael Buchanan. The presentation will begin shortly. Read our recent article In Bonds, Active Beats Passive By Ellen Cammer Product Specialist Visit www.westernasset.c
Slide 2: Finding Opportunity Amidst Hope, Doubt, and a New US Administration
Biographies Finding Opportunity Amidst Hope, Doubt, and a New US Administration December 14, 2016 Michael C. Buchanan, CFA Deputy Chief Investment Officer 22
Slide 3: Summary
Summary Fixed-Income Environment Post Election: Do the Markets Have It Right? The new administration’s agenda includes strong pro-growth policies The market is pricing in successful implementation of these new initiatives. Furthermore, concerns involving trade and immigration appear limited Wh
Slide 4: Significant Market Moves Since the Election
Significant Market Moves Since the Election Markets appear to have priced in enactment of the new administrations pro-growth agenda as a fait accompli US Rates Have Risen Equities Have Made New Highs 2.6 1,450 1,400 2.4 1,350 +67 bps Index Level 2.2 +18% Percent 1,300 10-Year Treasury Russell 2000 2
Slide 5: Growth and Inflation
Growth and Inflation Global growth is slow but sustainable at about 3%. Global debt loads, however, are flashing a cautionary sign that improvements will take time and take much central bank support World GDP Debt to GDP by Region 6 140 Japan 5 120 4 100 Percent Growth Net Debt/GDP 3 80 United State
Slide 6: Focus Items for President-Elect
Focus Items for President-Elect Individual and corporate tax cuts/reforms Infrastructure spending Deregulation Trade and immigration 6
Slide 7: Tax Reform Is Likely to Be an Early Focus
Tax Reform Is Likely to Be an Early Focus Tax cuts, particularly for corporations, have been a primary source of market optimism Top Marginal Individual Tax Rate Corporate Tax Rates in the OECD 100 90 31-35 Current US Rate = 35% 80 Corporate Income Tax Rate (%) 26-30 70 60 21-25 Percent 50 House Rep
Slide 8: The President-Elect Has Proposed Aggressive Infrastructure Spending
The President-Elect Has Proposed Aggressive Infrastructure Spending Will deficit concerns constrain size of fiscal easing? US Federal Budget Deficit Recession Trump - Assumptions CBO Forecast January 2016 Baseline 4 CBO Forecast 2 0 -2 Percent of GDP -4 -6 -8 Trump/ Republican -10 Proposals -12 1966
Slide 9: Deregulation
Deregulation Regulatory changes are complex, and not all can be approved solely by the executive branch White House Energy: Emissions standards, pipelines DOL Fiduciary Rule: Could change requirements for financial advisors on retirement accounts or at least ease enforcement Labor: Can halt im
Slide 10: Trade Policy
Trade Policy On a net basis the US balance of trade appears manageable. In isolation though, exports and imports are VERY large numbers US Goods Trade Balance 15 10 Exports To: China Europe 5 NAFTA Percent of GDP Rest of World 0 Goods Trade Balance Imports From: Rest of World -5 NAFTA Europe -10 Chi
Slide 11: Inflation Expectations Suggest "Gradual" Approach to Rate Hikes
Inflation Expectations Suggest "Gradual" Approach to Rate Hikes Although they have rebounded significantly following Trump’s election, inflation expectations remain lower than mid- 2014 levels 10-Year Breakeven Inflation 2.8 2.6 2.4 Nov '16 FOMC Meeting: "Market-based measures of inflation compensat
Slide 12: Monetary Policy Will Respond to Changes in the Outlook
Monetary Policy Will Respond to Changes in the Outlook Following the change in the outlook for fiscal policy and growth, expectations for Fed hikes have moved closer to the FOMC’s own expectations FOMC and Market Expectations for Rate Hikes Fed Funds Futures - As of 02 Nov 16 Fed Funds Futures - As
Slide 13: Conclusion
Conclusion While the new administration is likely to improve growth, challenges remain. We favor a fixed-income portfolio with emphasis on specific spread sectors and a long duration bias. Rates Emerging Markets Duration Headwinds for EM growth have increased with – Rates have moved too far too
Slide 14: Questions & Answers / Thank You
Questions & Answers Thank You 14
Slide 15: Risk Disclosure
Risk Disclosure © Western Asset Management Company 2016. This publication is the property of Western Asset Management Company and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated
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