Sunday, October 5, 2014

Some off-topic Sunday news

Here's some fun reading:

BI - investors fretting over junk bonds. Except junk bonds are the least junky that they've been in a decade, since they're so well funded. So in reality, these "investors" are really just monitoring flows to watch for risk-on/risk-off signals. Quote:
The spread has since widened by more than 100 basis points, according to Bank of America-Merrill Lynch data. Previous spikes of this magnitude have preceded pullbacks in the S&P 500, and the greater the selloff in high-yield debt, the worse the outcome was for stocks.
Yeah okay. In reality, the previous junk moves only happened because the entire market moved, in response to EZ fear and Cyprus fear and debt ceiling fear and so on. Hypercorrelation, remember that? And maybe the junk moves only preceded broad market moves because the people in junk know how grossly illiquid their market is, so they made sure to get out early.

In other words, all the junk spread is doing is telling you the market's risk-on/risk-off stance. When you compare it to the economic reality and the equity market's value ex-USD, you can calculate the irrationality of that stance.

Basically, junk bonds don't predict anything beyond piddled pink panties when you're in a bull market. And who the fuck thinks it's smart to jump in and out of a bull market anyway?

Calculated Risk - trade deficit decreased in August. I'm linking to it because of this chart:

US exports are 30% higher than they were in 2007, and the forward outlook is better than it was in 2007 (when everyone realized everything was about to collapse). If US exports are 30% higher, why shouldn't the US market be 20% higher?

BI - JP Morgan cyber attack: it was the Russians. Y'know, I would think that the US could take down all of Russia in a heartbeat if they wanted to. So why don't they? Quit being pussies, America.

BBC News - Top Gear crew chased out of Argentina by thousands of screaming loonies. All because they had a car with a license plate that reminded Argentinians of their stunning defeat at the hands of the British Navy, after they stupidly tried to steal the Falklands. Gotta love Jeremy Clarkson!

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