2 replies to this topic

[ogm]

That is exactly what is going on. For a long time we had low spreads and in order to pick up yield people were piling on leverage in the riskiest areas of the credit markets. Now this leverage is unwinding and spreads have skyrocketed. Here is the main question of the day... will the higher yields on junk slow down the world economy, since the debt is getting more expensive ? I think it will to certain extent, and the corporate profits will be squeezed in some areas. That said, I think that this unwinding is ultimately returning the spreads to normal, and is creating an opportunity to pick that stuff up with some good yields. Falling yields on treasuries and the Dollar is starting to perk up too, which makes that even more attractive. \ I think world central banks are done raising rates for the time being and that pressure is off the markets too. As for stocks.... they look shady. But I think Banks are getting close to overdone. I'm already seeing 5+% yields on some of them, like USB or BAC. Yields will ultimately support the stocks once the initial fear passes. I'm still buying income paying closed end funds ( the main victims of unwinding leverage) And selective stocks. Though very selectively. And not always correctly Indexes should underperform from here on. As for technical perspective..... Monthly momentum is up, weekly down, daily down, and oversold. Untill monthly momentum rolls over , there is no bear market. But we'll probably see some serious fear here. VIX 40 ?

[OEXCHAOS]

Relative VIX Repeat BUY this morning.

[relax]

thanks mark!