With Corporate Debt-To-GDP At An All-Time High, The Defaults Are Coming…
Boy, oh boy.
If you weren't worried about USD HY or about the sustainability of the bubble in credit markets more generally, then I've got some charts that may change your mind.
But first, just a couple of reminders here. IG has been outperforming HY for months, but remember, in an absolute sense, HY spreads and yields are still near post-crisis tights and lows, respectively.
In other words, both IG and HY are probably in bubble territory and it's starting to feel like junk may be on the ve
Month after month, the Heissenberg and other savvy financial writers discuss and analyze the growing debt and equity bubbles. But neither they, nor we of lesser knowledge and intellect, are able to time a tipping point. So, it seems to me that rather than worrying about what thin ice upon which we are skating, we should simply wait for the definitive crack, and visible split in the ice sheet. My personal exit plan of selling stocks, and buying bear put spreads, will probably be executed over weeks, maybe months. The great unwinds of Y2K and the Great Financial Crisis took many months to complete, and many, including myself, were able to adequately hedge weeks after the tops were in.
Carl000, I doubt you will be hedging when you see a crack, you’ll be buying the fucking dip like everyone else.