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Art Cashin: High-yield contagion fears rise as oil extends drop
This story has been around for a couple months now. But with all the press it is suddenly getting you would think it's new news. Junk corps open end funds topped in the late June/early July period and the Merrill Lynch High Yield Master II Index topped on September 1. Whether this will be a replay of 2008/09 but in reverse remains to be seen. Then, junk bottomed in mid December while stocks bottomed a few months later in early March. Meanwhile junk munis just keep on rolling.
A close below 2% and I pay Heezsafe $250 or if he has disappeared, I simply contribute to David and the board. This will be less than 1/10 of 1% of what I made in junk munis this year. The moral of the story is trade what you see, not what you think!! In other words, go with price and only price and leave your opinions and beliefs (and especially those of the experts) behind. No way did I ever think rates would get this low. In fact, I was among the mass of misinformed who thought rates had only one way to go at the beginning of the year and that was up.
Analysts said the weak inflation trend was likely to continue until next year.
Probably the same analysts and economists (ex Gundlach) who were almost universal in their predictions that interest rates had only one way to go in 2014 and that was up. Which analysts and economists thought the big market in 2014 would be junk muni bonds? Price shot out of the gate in January 2014 and then months later the analysts and economists all jumped on the price bandwagon trying to explain fundamentally why it was such a strong bull market.
Something for the muni fans like Dex and I to think about. Puerto Rico is a junk muni while the others are investment grade. Still, if munis ever feel the pain of falling oil, the junk credits will get hit the hardest.
Analysts said the weak inflation trend was likely to continue until next year.
Ha! Whoever those analysts referred to in the article are, if the writer is representing them accurately, they're REALLY stepping out on that prediction - "until next year" is two more weeks.
Comments
Regards,
Ted
Regards,
Ted
When will it hit 1%?
Germany, Spain, Italy, UK all lower then the US!
(like where's the bottom in oil?)
Analysts said the weak inflation trend was likely to continue until next year.
Probably the same analysts and economists (ex Gundlach) who were almost universal in their predictions that interest rates had only one way to go in 2014 and that was up. Which analysts and economists thought the big market in 2014 would be junk muni bonds? Price shot out of the gate in January 2014 and then months later the analysts and economists all jumped on the price bandwagon trying to explain fundamentally why it was such a strong bull market.
Something for the muni fans like Dex and I to think about. Puerto Rico is a junk muni while the others are investment grade. Still, if munis ever feel the pain of falling oil, the junk credits will get hit the hardest.