Yesterday Jeff Gundlach gave another terrific presentation on the markets. There were three charts, in particular, that really stood out to me. The first shows the recent trend in junk bond issuance. Since 2009, it has just surged to levels never before seen, both nominally and as a percent of GDP: The second chart shows a […]
The debate over the economy has really heated up over the past few weeks since the Fed raised the funds rate. Some believe we are likely headed for recession. Others dismiss the idea out of hand. Many times, these latter folks point to the yield curve as evidence there is no recession on the horizon. […]
For all of the digital ink spent recently on the two interrelated topics of investment managers raising cash holdings and mutual fund outflows, very, very little of has been spent on why we have seen these new trends develop. The Wall Street Journal on Sunday ran such a piece and out of 1,162 words, some readers […]
Last April I wrote a post about the specific trading style that has made guys like Stan Druckenmiller, Jim Rogers and George Soros so successful. That post focused on a single quote from Druck which I found particularly compelling because it goes against what most investment pundits would tell you is the right way to […]
The chart above tracks the broad stock market against the spread of lowest-rated investment-grade corporate bond yields. They normally track each other very closely as they both reflect broad investor risk appetites. When investors are hungry for risk stock prices move higher and corporate spreads get narrower. When risk aversion takes over, however, stock prices […]
If QE has pushed risk asset prices beyond the point that is validated by the fundamentals then there will necessarily be a reckoning
There is an ongoing debate about the current state of the junk bond market and what it means for equities and, more broadly, the economy. Spreads on the junkiest of junk bonds have recently moved to their widest levels of this expansion. The NY Times aptly reflects the consensus view that there has really been […]
Once again, it’s becoming popular for the media to bash Warren Buffett’s lackluster performance.
Margin debt made a comeback in October. With stocks rising 10% or so during the month this should not be surprising at all. What is interesting, however, is the level of margin debt-to-GDP.
I’ve written a fair amount about bond market risk appetites over the past year or so. Today, I’m watching the leveraged loan market even more closely because it’s moving in the opposite direction of the stock market across a variety of time frames. Typically, risk appetites for leveraged loans (as measured by prices relative to same […]