Money and Finance
- Hussman Weekly Market Comment: The Truth Does Not Change According To Our Ability To Stomach It
Our estimate of prospective 10-year nominal S&P 500 total returns has eroded to just 2.3%, suggesting that equities are likely to underperform even the relatively low returns available on 10-year Treasury bonds in the coming decade. Those estimates...
- John Mauldin: A Code Red World
NYSE margin debt is showing the kind of rapid acceleration that often signals a draw down in the S&P 500. Are we there yet? Maybe not, as the level of investor complacency is just so (insert your favorite expletive) high. The potential for bubbles...
- Hussman Weekly Market Comment: The Endgame Is Forced Liquidation
While the attention of investors is focused on the short-run market outlook in what is already a mature bull market advance, it’s crucial to understand the endgame to this overvalued, overbought, overbullish, overleveraged episode of market history....
- Doom Heralded At Hayman By Widening Trade Deficit: Japan Credit
Thanks to Will for passing this along. Going back and reviewing an investor letterfrom Kyle Bass dated November 30, 2011, Bass wrote “We believe that Japan would have a bond crisis of its own within the next two years without the current European debt...
- Big Long Is New Big Short As Bass Joins Subprime Bet
Investors who made some of the biggest profits from the 2007 bust in U.S. mortgages are once again in agreement. This time, they’re going long. Hedge fund manager Kyle Bass, who made $500 million betting against subprime debt in the crash, is raising...
Money and Finance
Bond Hubris Overwhelms Fed in Riskiest Credit-Market Sectors
Bond investors trying to divine when the Federal Reserve will reduce its unprecedented monetary stimulus are increasingly looking to the riskiest parts of the debt market, which are booming like before the financial crisis.
The amount of loans made this year that lack standard protections for lenders exceed the all-time high set in 2007, and only one other time have investors pumped more money into funds that buy lower-rated loans than they did last week. Bonds rated in the lowest category of junk accounted for the greatest percentage of speculative-grade offerings last month since 2011.
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The market for so-called covenant-light loans that lack typical lender safeguards such as limits on debt has already soared to $155 billion this year, beating the record $96.6 billion in 2007, according to Standard & Poor’s Capital IQ Leveraged Commentary and Data.
Junk-bond sales rose 24 percent to $235.3 billion through Aug. 9 compared to the same period a year ago, according to data compiled by Bloomberg. Those securities and leveraged loans are rated below Baa3 by Moody’s Investors Service and less than BBB-at S&P.
Sales of payment-in-kind, or PIK, notes, which allow borrowers who can’t meet interest obligations to pay with additional debt, total more than $6.5 billion this year, on pace to top the $8.1 billion issued in 2012, Bloomberg data show.
Corporate bonds in the lowest rating tier of CCC made up 10.3 percent of the $22.4 billion in high yield sales in July, the most since 2011, according to JPMorgan Chase & Co.
- Hussman Weekly Market Comment: The Truth Does Not Change According To Our Ability To Stomach It
Our estimate of prospective 10-year nominal S&P 500 total returns has eroded to just 2.3%, suggesting that equities are likely to underperform even the relatively low returns available on 10-year Treasury bonds in the coming decade. Those estimates...
- John Mauldin: A Code Red World
NYSE margin debt is showing the kind of rapid acceleration that often signals a draw down in the S&P 500. Are we there yet? Maybe not, as the level of investor complacency is just so (insert your favorite expletive) high. The potential for bubbles...
- Hussman Weekly Market Comment: The Endgame Is Forced Liquidation
While the attention of investors is focused on the short-run market outlook in what is already a mature bull market advance, it’s crucial to understand the endgame to this overvalued, overbought, overbullish, overleveraged episode of market history....
- Doom Heralded At Hayman By Widening Trade Deficit: Japan Credit
Thanks to Will for passing this along. Going back and reviewing an investor letterfrom Kyle Bass dated November 30, 2011, Bass wrote “We believe that Japan would have a bond crisis of its own within the next two years without the current European debt...
- Big Long Is New Big Short As Bass Joins Subprime Bet
Investors who made some of the biggest profits from the 2007 bust in U.S. mortgages are once again in agreement. This time, they’re going long. Hedge fund manager Kyle Bass, who made $500 million betting against subprime debt in the crash, is raising...