Seeking Alpha

Gary Tanashian's  Instablog

Gary Tanashian
Send Message
Gary Tanashian is proprietor of Biiwii.com. Actionable, hype-free technical, macro economic and sentiment analysis is provided in the premium newsletter Notes From the Rabbit Hole (http://www.biiwii.com/NFTRH/subscribe.htm). Complimentary analysis and commentary is available at the 'Biiwii Blog'... More
My company:
Biiwii.com's Notes From the Rabbit Hole
My blog:
Biiwii.com's Notes From the Rabbit Hole
  • We Have Gone FULL CASINO 1 comment
    Apr 6, 2010 10:25 AM | about stocks: TLT, IEF, IEI, SHY, TIP
    Unloved Junk Debt May Be Best Bond Investment --Bloomberg

    Goldman Sachs Group Inc. is recommending high-yield, high- risk bonds with rankings in the BB tier, the first below investment grade on the Standard & Poor’s scale.

    Ha ha ha... we are the financial media and we need to fill these pages with any old static day after day after day. The airwaves too, if the previous post is any indicator.

    Junk bonds have rallied at an unprecedented pace since December 2008 after the market seizure that followed the failure of Lehman Brothers Holdings Inc. Companies are issuing record amounts of the debt as the economy improves, corporate default rates decline and the Federal Reserve holds interest rates at near zero, spurring investors to seek higher yields.

    In Wonderland... anything is possible. Just imagine it and it can come to be.

    “BBs have been in an unloved space, too risky for investment-grade investors but not risky enough for high-yield investors,” said Alberto Gallo, a strategist at Goldman Sachs in New York. “That has preserved a lot of value.”

    Stick to cheap wine Alberto. You're not cutting it in the cheap analysis biz.

    Treasury 10-year note yields climbed to 4 percent for the first time since June as evidence the economic recovery is gaining traction added to concern that debt sales to fund record deficits will overwhelm demand. Yields on Fannie Mae and Freddie Mac mortgage securities that guide home-loan rates rose to the highest in almost eight months.

    Bloomberg News, the conduit for tragic misinformation/misperception spoon-fed directly to the public by Satan himself. Good thing less and less of the public is buying it as the illusion weakens. How about a quote they forgot to include from Analyst X:

    "The rise in 10 year yields is the result of concern by the treasury bond market that the US' primary economic fundamental underpinning - their will and ability to inflate the world's reserve currency - is getting well out of hand. Here at XYZ Securities, we are very concerned about the current state of long term yields, which are the ultimate arbiter as to whether or not the world's largest economy can continue to inflate as usual. The bond market, unlike at any time in recent history, is on the verge of rebellion."


    Disclosure: No positions mentioned
Back To Gary Tanashian's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • BB bonds are not "full casino" at all, unlike CCCs and CC-D bonds, which the author of the article in question mentioned as not attractive. High yield is also a good hedge from rising rates risk, because spread is inversely related to rates (which means the bond price would be relatively unchanged).
    12 Apr 2010, 04:10 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.