Saturday, December 29, 2012



What JUMPS off these pages to me,  is how "US leveraged loans jumped 24% from 2011 to $465bn, lending volumes below only 2006 and 2007 levels"  "Sales of high yield bonds $354bn jumped 23% above previous 2010 record" This refers to high yield (JUNK) bonds I suppose.

Global corp bond sales surpass previous 2009 record and so on.

What is going on is unprecedented, and under NORMAL circumstances should have ignited an inflationary spiral the likes we've never seen. That just hasn't been so as of yet......end demand is NOT THERE and capacity is WELL below smoking.....are we not in the clutches of a DEFLATIONARY SPIRAL the likes of which we cannot escape, and where bonds will continue to outperform?

Here , where not enough jobs are being created, and corporate profits and contracting from (record levels?), the markets have surely decoupled from fundamentals. Unless long term investors believe in unlimited CB support, that will finally win the day, it would seem the prudent thing to do is prepare for the worst outcome imaginable.


No comments: