The subject here reads like Goldilocks test results. The overall thought here is related to the MFO junk bond link in
PART 2.
PART 1: Once upon a time, there was a little girl named Goldilocks. She went for a walk in the forest. Pretty soon, she came upon a house. She knocked and, when no one answered, she walked right in.
At the table in the kitchen, there were three bowls of porridge. Goldilocks was hungry. She tasted the porridge from the first bowl.
"This porridge is too hot!" she exclaimed.
So, she tasted the porridge from the second bowl.
"This porridge is too cold," she said
So, she tasted the last bowl of porridge.
"Ahhh, this porridge is just right," she said happily and she ate it all up.
How can we trust Goldilock's assessment of hot, cold and just right? What is the baseline, how does she compare with a peer group of porridge temperature testers?
PART 2: Now. A recent link here (not directed at you
@Ted , but the article author)
https://www.mutualfundobserver.com/discuss/discussion/36721/u-s-junk-bond-funds-post-4th-biggest-week-of-outflows-ever --- relative to the article:
.....would be nice if these data folks related the money values relative to 1992 or whatever time frame they choose to a "percentage" of total values involved; as to have a reference point for now.
What is this $4.4 billion withdrawal in terms of total monies in the HY sector? And how does this relate to 1992 values?
Oh, well; reader beware, eh?
GOSH, couldn't resist: All data believed accurate.
---U.S. high yield bonds outstanding value, July, 2017
$1.5 TrillionSo, HY outflows at $4.4 billion were
.29% of total value, yes? Is this going to blow up the HY bond area and take equities with it.......???
PART 3: As to the .29% sell off/withdrawals in the HY sector; this could be similar to my telling the lady down the street who was born in 1925, that the St.Gaudens,1925-D, $20 gold piece presented to her on her birth day, by an uncle, recently declined in value by .29%; but that she should not be too concerned, as the worth of the coin was still acceptable.
https://www.ebay.com/itm/1925-D-ST-GAUDENS-20-NGC-MS-65/172873495315?hash=item2840103313:g:CvQAAOSwIdpZwVnzNOTE: By reading this far into this write, you have electronically signed my "hold harmless" agreement regarding content and accuracy; as this document was formalized while under the influence of OTC head cold medicine.
Comments, corrections or suggestions wholly accepted.
Summary: I'm just asking for a bit of proper reporting, i.e.; junk bond outflows.
End of whine !!!
Thank you.
Catch
Comments
Regards,
Ted
Lipper: High-Yield Flow Chart 2012-2017
http://lipperalpha.financial.thomsonreuters.com/wp-content/uploads/2017/11/Slide1-2.jpg
My paraphrasing his words:
When open ended funds, seeking a 5% yield for their client (the pensioner), invest in HY debt and that HY bond defaults on its obligation, the manager ends up having to sell something else to meet redemptions and/or cover the bad debt, the risk here is contagion (where a bad asset impacts and spreads to "less bad" assets). Something small can have a very big impact on the larger whole.
I will also link a longer presentation that is a bit "noisy" at the start of the video so fast forward through the introduction to the start of his presentation.
Much like we have come to know words like "Quantitative Easing" and "Austerity", Mr Napier discusses the next possible financial tools still left in the tool box such as "Financial Repression" and "Macro-prudential Regulation".