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time to Junk "Junk" Bonds

|Includes: HYG, SPDR Barclays Capital High Yield Bond ETF (JNK)
As I am in a mood today to dump copiously on the new crop of bubbles, let’s take a look at the junk market. I have been a huge fan of the high yield market since early last year, when the market was discounting an Armageddon type default rate that was never going to happen, and aggressively pushed high yield ETF’s like (NYSEARCA:JNK) and (NYSEARCA:HYG) (click here ). I still liked junk in my January 4 Annual Asset Allocation Review. But this is getting ridiculous. The average junk bond now yields 8.7%, down a whopping 100 basis points in a mere six weeks. It is now the lowest since October, 2007, when the credit crisis was just a theory espoused by a few crackpots, permabears, and “end of the world” sandwich board types. If the global carry trade suddenly goes into hibernation, or if economic prospects transition from a 5% to a 2.5% world, which I believe will happen sometime this year, the resulting carnage could be the goriest in the high yield area.