Imagine yourself an investment banker in 2009. You saw oil as a supreme opportunity to raise capital for enterprising oil men, who needed to pay ridiculous prices for land leases and equipment. Post housing disaster, there was a vacuum to fill for the high yield debt markets. Asset managers ate up the new oil and gas products with the appetite of 10,000 Leviathans.
Everything was going swimmingly, until the underlying price by which all of the debt was collateralized, in this case oil, fell to pieces.
Last night, Third Avenue announced they were freezing withdrawals from their illiquid, piece of shit, junk bond fund–which is spooking credit markets and haranguing HYG and JNK today. In light of this development, Goldman is out with some fresh research, shitting onto the faces of the fuckheads over at BEN.
Enjoy
Merry fucking Xmas everyone.
BEN was down 5.8%, to $36.22, at the time of this post.
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We hit a 50% retracement today in HYG from the 2009 lows. This, together with the Third Avenue news and the pervasive negative sentiment toward high yield that seems to have peaked today, has me long HYG and a related ETF, PHB.
Stick your charts where the sun is non-existent. This is a fundamental concern.
I hear you. I’m just describing a trade I’m taking. Favorable risk-reward and all that. I’m not attempting to explain the fundamental concern.
With respect, I’d suggest that some of the key signals in Exodus also are driven by price behavior, not underlying fundamentals, and you espouse those (rightly, by the way!) as sound bases for trades.
Fundamentals don’t matter until they do.
I have a few small junky positions – JNK, SJNK and some Transocean bonds all stuff I’ve had for years for income. Like 1% of my portfolio. I added a few JNKs today, without enthusiasm. Collateral damage in junk I gots a feel for. My worry is what happens when defaults rip through the banking sector. And they’re coming, cause that’s what the Saudis want. FWIW, if anything can stop the Fed from hiking, this is it.
Showtime-trading had highyield&oil as major areas of manipulation.
As they were happening
junk up
oil down
Showtime-trading said the possible intent or regardless the result
Called it. Ho ho ho fools
Reminds me of the sub-prime crisis, no worries!
Reminds me of the run on banks in the Great Depression
The time for bottom fishing, they declare, “will be after a long, deep recession, when employment is down sharply and still falling, commodity prices have plunged, the scent of general price deflation fills the air and global financial and economic conditions are in turmoil. The risk pendulum, which reached extremes of complacency in 2006 before starting to swing back, will be near the other extreme, paranoia, not just in mortgage-related markets, but in asset markets generally. Fire sales to meet liquidity needs will abound.”
That’s from a now old forecast but the Levy Brothers could not have foreseen how much fuel the fed would pour on the fire. Nonetheless, it is no less accurate for that. Fire sales are coming, in all markets.
Nice find pb.
Hi showtime, fuck you, you alian fuck.