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Meanwhile, In Junk Exodus News…
The following short bit will come as no surprise to regular readers, and as such, I hesitated to giv
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Notwithstanding our collective “it’s the end of the world,” the bond market a truth machine compared to equities. I’ll take this data point as being coincident with a recognition of future prospects looking out to the period January through July.
Junk spreads will follow the direction of the economy, especially energy related which is a large share of the market. In my view, a likely outcome of all this a year or two from now is increased earnings and tepid stock market performance- P/E compression in other words. It won’t be headline grabbing, but that is probably the way market valuations come back into line. A P/E compression market probably helps high yield bond performance relative to other markets.