iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,473 Blog Posts

Let Me Show You Something: This Divergence Between High Yield and Banks Should Scare You

It’s mid-evening, so I figured now was the time to attempt to scare you, in order to deprive you of sleep. I understand a great many of you are long stocks, myself included. With that in mind, have a look at this (extra Large Marge)!

To put that chart into actual numbers, here are the returns of the HYG v the XLF. Notice how wide that divergence is year to date.

HYG

XLF

That’s almost a 10% differential! You people are smoking large bags of heroin if you think buying some dumbfuck oil pipeline company is a better investment than JPM or GS.

Yield

A reckoning is coming.

If you enjoy the content at iBankCoin, please follow us on Twitter

8 comments

  1. frog

    I guess people think that some dumbfuck oil pipeline company is undervalued, if they believe erl is about to rise? That’s the first explanation that comes to my mind. I am agnostic on that, as I am uncertain as to whether erl is going to go up much from here or not.

    • 0
    • 0
    • 0 Deem this to be "Fake News"
    • ironbird

      Shut up frog. You are a communist that wants everyone to fucking walk. You would ban the bus. No one is fooled around here.

      • 0
      • 0
      • 0 Deem this to be "Fake News"
      • frog

        These terms do below not all mean the same thing, Ironbird. And Bernie does not exactly fit into any of them.

        https://en.wikipedia.org/wiki/Communism

        https://en.wikipedia.org/wiki/Socialism

        https://en.wikipedia.org/wiki/Social_democracy

        Bernie is not proposing banning the bus, or cars either. Since Congress is so far to the Right, if Bernie is elected, all he would do is push the U.S. government ever so slightly to the Left, which it sure could use.

        Right Wingers invent a straw man, that is, a false argument set up to be defeated– and then attack the straw man. Progressives are not who you say we are.

        • 0
        • 0
        • 0 Deem this to be "Fake News"
      • ironbird

        Horseshit. You are a commie and do not even realize it. What if life was fun frog? Have you ever considered such an outlandish idea? I doubt it.

        • 0
        • 0
        • 0 Deem this to be "Fake News"
  2. btn

    Fly, I’m ahead of you on this and have a nice HYG short going. One thing that may be holding it up is that the ECB is buying corporate bonds, but not buying equities (yet?).

    Once the rain starts, then I’m sure HYG will provide a nice anchor for the Ark

    • 0
    • 0
    • 0 Deem this to be "Fake News"
    • ironbird

      Be careful. NIRP world has different rules no one but they are writing. Trades change.

      • 0
      • 0
      • 0 Deem this to be "Fake News"
      • btn

        Yup, rules change -> trades change.

        Maybe the FED will start to buy Investment grade, causing all bonds to rise (just as the ECB has). However, I still figure that there won’t be a need for CBs to buy bonds until they start dropping. I’ll probably have to ditch them early though, anticipating the new rulebook.

        • 0
        • 0
        • 0 Deem this to be "Fake News"
      • ironbird

        Indeed. Was thinking more just dead money.

        • 0
        • 0
        • 0 Deem this to be "Fake News"