High Yield

Blind Faith Everywhere

Beware of academics bearing models. Knowing prices are wrong and knowing when they are going to correct are two very different things - being able to survive until and through the correction is vital.

Surprisingly Ugly, Tailing 10Y Auction Spooks Market

While it was less surprising that today's 10Y ended up being poorly digested by the market, the market was clearly shocked by just how bad today's sale of $23 billion in 10Y paper went, which priced at a high yield of 2.333%, a huge 1.9bps tail to the 2.314% When Issued.This was the biggest tail in the issue going back all the way to March of 2016.

Shorts Squeezed As Foreign Central Banks Spike In Strong 3 Year Auction

Moments ago the US Treasury announced that it sold $24 billion in 3Y paper in a strong auction in which the repo tightness helped the high yield print at 1.423%, stopping through the when issued 1.427% by 0.4 bps, despite a Bid to Cover which dipped from last month's 2.968 to 2.782.

Japan - It's Finally Happening

"I still shake my head at the stupidity. One of the most overindebted countries in the history of modern finance trading with a 0% thirty year bond... But this week the market decided to test the BoJ’s resolve... The market is finally saying the demand for credit is enough to force the Bank of Japan to buy bonds to keep rates down. And that was the signal I was waiting for. I am shorting JGBs with both fists."

The Full Breakdown Of How Trump Tax Policies Will Impact S&P Earnings

Some form of corporate tax reform under Trump seems likely likely as it is a stated priority of President Trump and has widespread Congressional support. In the following analysis, BofA analyzes the four components that could have big equity implications on S&P500 earnings over the coming years.

"When Will It End?" BofAML's 10-Point Checklist

So "when will it end?" BofAML's best guess remains sometime in the summer. Here's their checklist of Positioning, Profit & Policy data to indicate we are in the Last 100 days of the rally, perhaps also the Last 100 Days of the secular upswing that began in March 2009...

Poor Demand For Tailing 5 Year Auction As Bid To Cover Slides

In what was almost a carbon copy replica of yesterday's 2 Year Treasury auction, moments ago the Treasury sold $34 billion in 5 Year paper, with rates all comfortably positive in the repo market, which explains why the 1.988% high yield once again tailed the When Issued of 1.976%. The tail of 1.2bps was the biggest since last July.

David Einhorn Explains How He Is Trading The "Trump Presidency"

1) Long a variety of low-multiple, tax-paying, U.S. value stocks; 2) Long AAPL; 3) Long GM; 4) Short “bubble basket.” 5) Short oil frackers, 6) Short CAT (and other similar industrial cyclicals that have moved much higher post-election).

Why Morgan Stanley Thinks Stocks "Will Do Worse Under The New Administration"

"Returns will likely do worse under the new administration than under the departing one, and where exceptions to this may be. That statement is linked to a simple idea. Good market environments often involve a shift from economic despair to optimism, and a shift in psychology from ‘fear’ to ‘greed’. Both occurred over the last eight years, producing returns well above the long-run average."

BofA Warns Of 'Icarus' Trade: "A Wobble Then A Melt-Up... Followed By A Melt-Down"

"After a Jan/Feb wobble, we believe stocks & commodities will have one last 10% meltup in H1," explains BofA's Michael Hartnett in his latest note, but, he adds, by the end of 2017 we will see a "meltdown." BofA awaits the endgame of the so-called "Icarus Trade" amid unambiguous signs of bullish investor Positioning, bullish Profit expectations & hawkish Policy from Fed/ECB, as well as outperformance from laggard risk assets; before calling for the Big Short.