Gruenwald on Yahoo! | China’s Changing Exports | Cyber Risk Detection | US Leveraged Finance | SPGI’s Innovative Board | EE Hits 20,000

Welcome to the latest edition of Essential Economics. We kick off this week with my visit to Yahoo! Finance in New York, where I undertook a deep dive on inflation with anchors Julie Hyman and Brad Smith, arguing that the battle is yet to be won. APAC Chief Economist Louis Kuijs blogs that China’s exports are showing resilience despite the headwinds from the realignment of global supply chains. Cyber Risk Expert Martin Whitworth and team look cyber risk detection systems and argue that weak threat detection could have negative implications for credit quality. Credit Analysts Hanna Zhang and team examined the credit metrics for the 12 months before downgrades to B- and the CCC category as well as for upgrades from CCC; debt service and profitability were key factors. We congratulate the S&P Global Board for being ranked as the third most innovative in Forbes magazine’s Modern Board 25 list. Finally, Essential Economics thanks all of our supporters as we recently passed the 20,000 subscriber threshold.

Gruenwald on Yahoo! Finance

I dropped by the Yahoo! Finance studio in New York this week for a deep dive on US inflation with anchors Julie Hyman and Brad Smith. I argued that recent data show only limited progress on bringing inflation back to target and that the battle has yet to be won.

To watch the interview, click here.

China’s Changing Exports

Louis blogs that the adjustment of global supply chains, with firms reducing the role of China in their production chains, is one of the most important and discussed processes in global economics currently. Given this trend it is remarkable how well China’s exports have been holding up.

The resilience of overall exports in the face of such reallocation points to an important shift in China’s export-oriented manufacturing sector.

To read the blog, click here.

Cyber Risk Detection

Martin and team write that rapid detection of a cyberattack is the foundation of an organization’s ability to avert and limit financial and reputational damage from a network breach. Cyber detection requires, at least, the means to log activity and analyze those logs, while augmented systems can also incorporate automation, specialists, and threat hunting.

We see weak threat detection as a deficiency in operational risk management and potentially a negative factor for an issuer's credit quality.

To read the full report, click here.

US Leveraged Finance Update

Hanna and team note that the rise of debt service costs and deceleration of profit growth led to more credit issues for U.S. corporates with an uptick in negative rating actions, especially among borrowers at the lower end of speculative grade. We examine the credit metrics for the 12 months before downgrades to B- and the CCC category as well as for upgrades from the CCC category.

Median leverage for companies downgraded to the CCC category rose to 15.5x as EBITDA all but dried up; it was 8x for entities rated B-.

To read the full report, click here.

S&P Global Board Ranked #3 In Forbes’ Modern 25 List

Congrats to the S&P Global Board, which was ranked as the third most innovative board according to Forbes magazine. The Forbes’ Modern Board 25 list is based on the belief that in a rapidly changing business climate, board innovation—and the high performance that comes with it—is predicated on who is in the room.

The ranking was based on criteria that include the expertise, independence, diversity, and tenure of board membership.

Check out the announcement, click here.

Essential Economics Surpasses 20,000 Subscribers

Essential Economics reached another big milestone last week when we passed 20,000 subscribers. Thanks to “Team EE” for your hard work in making it happen every week. To all of our dedicated readers: thanks for your support and please invite your networks to subscribe.