If "credit anticipates and equity confirms," what does the recent sharp widening of high-yield...

If "credit anticipates and equity confirms," what does the recent sharp widening of high-yield spreads - their ratio to investment grade spreads rising to a 3-year high - tell us about the future of the stock market?

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Comments (13)
  • bbro
    , contributor
    Comments (11240) | Send Message
    Track the total return performance of high yield to investment grades
    on a relative strength basis
    26 Oct 2012, 02:52 PM Reply Like
  • MexCom
    , contributor
    Comments (3077) | Send Message
    It will have more impact on the Treasury bond market when rates start to increase. The high quality paper will get dumped and the flood of cash could chase hi-yield but my bet is that quality equity issues should benefit most.
    26 Oct 2012, 03:47 PM Reply Like
  • Brian Bobbitt
    , contributor
    Comments (2087) | Send Message
    These are hard questions. Sometimes, when 'normal' trading becomes a thing of the past, a new normal of kind of aberrant clone of the old rules tug you towards the abyss.


    My bet is most issues will be selling off, and the tension in the air smacks of a major correction as everyone heads for the hills.


    Add to that the full moon, the hurricane Sandy approaching the trading center of the world, and the financial capital.


    Add in the elections, what more can you expect than roiling prices, ideas and scenarios.


    I am OUT and staying out til the dust settles no matter how much I miss.


    The ONLY thing I will do is suspect there is a big move coming in the market.


    I suspect that a spread of long and short the DOW ETF's may be the play of a lifetime. Once the direction is found, sell out the other leg, and ride the tide. If it goes up, hold that with a trailing stop, and the higher it goes, move the trailing stop closer.


    For the downside, it may be powerful. I predict an Obama win, and a market in a tail spin, and all stops put in by the exchanges will only stem the tide for when it opens again.


    Romney will be good for stocks, and Obama will cause a sell-off. Obama is not Carter, and Romney is not Bush or Bush.


    Obama is a socialist, and will cause the world to cringe in fear. Most of the people who voted for Obama last time, will probably switch, and from what I can tell, it won't take much to swing it for Romney, but I fear the takers will take the day, and the givers will be allowed to give more until there is no more to give, then the party stops.


    Capt. Brian
    The Lost Navigator
    26 Oct 2012, 07:28 PM Reply Like
  • Laurent1962
    , contributor
    Comments (101) | Send Message
    "Obama is a socialist" : is he really and if you really think so, why ?
    26 Oct 2012, 11:32 PM Reply Like
  • franlemke
    , contributor
    Comments (7) | Send Message
    The rich have not paid a fair share of taxes for fifty years or more. The US government has been using Social Security money to keep taxes low and pay for wars (Vietnam through Afghanistan), thus changing the hard cash of SS contributions into debt chargeable to the US government. We should raise taxes and honor our debts. If the Koch Bros can spend $100 million on influencing our elections we definitely have not been taxing them enough. Obama is no more a socialist than you are but he obviously believes in fairness: one example might be the stagnant wages being paid these last twenty years. That is why much of the bottom of the economic curve don't pay taxes anymore: they simply don't earn enough in wages to pay any income taxes.
    26 Oct 2012, 08:59 PM Reply Like
  • phorque
    , contributor
    Comments (11) | Send Message
    To not accept the fact that Obama is a hardcore Socialist is to not comprehend the man or what is going on in the world.
    26 Oct 2012, 09:19 PM Reply Like
  • Laurent1962
    , contributor
    Comments (101) | Send Message
    Do you know what Socialism is, please explain to me why you consider Barack Obama a Socialist please ?
    26 Oct 2012, 11:34 PM Reply Like
  • Petrarch
    , contributor
    Comments (1178) | Send Message
    sure. Fabian Socialist.


    Obama's economic model turns on the creation of a "just" society where Government uses its power to
    (1) redistribute income away from those who earn it toward those who cannot by means of taxing income, capital and saving
    (2) enlarge entitlement safety net into a cage of safety where-in the contented masses will remain in a state of docile torpor on the dole
    (3) through regulation - control and influence economic decision making toward socially (Government) acceptable end.


    Here it is in action - Obamacare has the trifecta - it hits #1, #2 and #3. Socialize esential services e.g. health care - through Government underwriting a "free" service to be paid for by those who earn income. Do you not wonder why Obamacare was THE TOP priority of the Administrtion over Jobs or Growth or Trade - none of those advance the Fabian agenda.


    "They (Fabian Socialists) were going to create a just society for the British workers - the beginning of a welfare state, cheap council housing, free medicine and dental treatment, free spectacles, generous unemployment benefits. Of course, for students from the colonies, like Singapore and Malaya, it was a great attraction as the alternative to communism. We did not see until the 1970s that that was the beginning of big problems contributing to the inevitable decline of the British economy."


    —Lee Kuan Yew interview with Lianhe Zaobao[18]


    Obamaism is classic Fabianism. If you don't see that you are not looking.


    Nothing wrong with this - except that as Lee Kuan Yew states and many otehr know. It does not work.


    Obama Must Be Defeated. At all costs.
    Obama Must be Defeated.


    27 Oct 2012, 12:03 PM Reply Like
  • Laurent1962
    , contributor
    Comments (101) | Send Message
    Comments who consider Barack Obama a Socialist are so strange :


    is it because of Medicare that all developed Countries should have, not only here in France but in Canada, yes this "socialist" Country up north from you in the US ;-) ?
    26 Oct 2012, 11:36 PM Reply Like
  • Freedoms Truth
    , contributor
    Comments (1114) | Send Message
    The US Govt has owned GM stock (aka "Government Motors") for 4 years, that's textbook socialism; Obamacare is a govt takeover of healthcare, and Obama has repeatedly spoken out in favor redistributionism and "you didnt build it" attitudes that reflect the false belief that govt should dictate economic terms and allocate economic rewards.


    Quit denying the obvious: Obama is a (closeted) socialist like Liberace was gay.
    27 Oct 2012, 12:49 AM Reply Like
  • kmi
    , contributor
    Comments (4758) | Send Message
    Feel free to point out a 'free market country' that has not had its government take control of private corporations.


    Also, do I really need to point out that G.W. Bush was the originator of the GM bailout, and Obama was the follow-through guy?


    I guess GW was a socialist too.


    Finally, I guess you missed the part about 'you didn't build it' relating to government funded and initiated infrastructure like the internet, the rail, the highway system. If you don't understand how government funded infrastructure impacts private enterprise please study up on it.


    I'll further point out with regard to 'you didn't build it' just how frequently the US goes to war to protect its private enterprise interests.


    Finally, if your understanding of 'redistribution' is that more of the nation's income must go to the middle class, then Romney is also a redistributionist if you missed it. Because if more of the nation's wealth goes to the middle class, this implies necessarily that less goes to the elites.
    27 Oct 2012, 08:54 AM Reply Like
  • ksealund
    , contributor
    Comments (53) | Send Message
    I have to jump in here on the whole socialist issue.


    It is a dissapointment for me that so many "educated" people in the market have a knee jerk negative reaction to anything government. Talk to DARPA and the military, to name just a couple, about how inefficient and incompetent they are (military; now there's socialism for ya).


    A complex issue but suffice it to say there are two things to bear in mind relative to government's role in business: 1. Self interest is what makes Capitalism work. Anytime an enterprise has a preponderence of power, it will naturally work to horde capital and minimize competition. Government has a role to ensure the equal access to capital and to promote competition (aka regulation). This too is critical to the success of Capitalism. 2. Henry Ford knew that if he did not have consumers all bets were off. Ergo steps need to be taken to re-destribute wealth to the extent there is enough demand to sustain future opportunities to get rich (aka taxes). I suppose at the rate the wealth is rolling into one corner of the room, in the not so distant future, us rich, whoever is left, can exchange yachts as some form of economic activity (aside from hiring guards and builidng walls)? You don't have to like taxes, but you should understand the long term economic necessity (roads and schools are cool too).


    And while I am at it; In recent times, stimulus money in the form of extend unemployment, bailouts, etc, etc., has been used to "prime the pump" but demonized for increasing the debt? By the myth and magic of the "Free Market" was recovery from the great recession to resolve itself?


    My apologies but in keeping with the tone of the critcism, this is an incredible over simplification, Please, as we look for answers, let's endeavor to be less ideological and more pragmatic. Take Care!
    29 Oct 2012, 06:58 AM Reply Like
  • phorque
    , contributor
    Comments (11) | Send Message
    It is pretty obvious that you don't really comprehend capitalism. I can just say that Government direction of distributing wealth and raising taxes to stimulate demand has never worked anywhere on Earth...ever...in the history of mankind.


    But keep on dreaming. That's really what the US needs most. Dreamers on the Government dole because they believe they are not being paid as much as they should. I presume you have forgotten what happened when Clinton joined with Newt, the House and the Senate to end welfare.... I'm sorry but unemployment dropped below 4% in a few months, the Government ran a surplus and led to a continuation of the Reagan years' economic growth leading to the longest economic expansion in the country's history.
    7 Nov 2012, 04:49 AM Reply Like
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