HY Investors Quietly Exit Stage Left

Tyler Durden's picture


We have discussed the divergence between US equities and credit markets a number of times in the last few months with the old adage that "credit anticipates, and equity confirms." Well, it appears the high-yield credit investors are 'anticipating' in size. State Street reports that yesterday saw the 2nd biggest withdrawal ever from their $11.6bn JNK ETF. Around $380mm (or over 3%) was redeemed - and we note the price did not exactly reflect that kind of unwind. The more worrying feature is that the last time HY credit investors were this 'sure' was May 2012 and it pre-empted a 9% drop in the S&P 500 and 5% drop in JNK price. The divergence remains extreme.



and closer up - this year has been 'different'


It seems if you are 'bullish' then backing up the truck in JNK is the play, if bearish sell Stocks, if neither - arb.

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Tue, 04/09/2013 - 15:24 | 3427902 ZippyBananaPants
ZippyBananaPants's picture

This will not end till fed stops QE.


Look for a drop after 2:00pm tomorrow when fed minuted are released, last month 300 points.

Tue, 04/09/2013 - 15:26 | 3427917 ghandi
ghandi's picture

Burn baby Burn!

Tue, 04/09/2013 - 15:32 | 3427951 ACP
ACP's picture

In other news...time for pencil control!


Student injures 15 other students with pencil or knife.

Tue, 04/09/2013 - 15:38 | 3427980 Dr. Engali
Dr. Engali's picture

Did that lead pencil have a full metal jacket? Do they make high capacity magazines for pencils?

Tue, 04/09/2013 - 15:39 | 3427991 ACP
ACP's picture

They busted out the ambulances, so I'm thinking pencils were "ballistic tip."

Tue, 04/09/2013 - 19:45 | 3428976 The Alarmist
The Alarmist's picture

This is not a small observation.

Tue, 04/09/2013 - 15:39 | 3427985 Navymugsy
Navymugsy's picture

You'll get my pencil when you pry it from my cold, dead hands!

Tue, 04/09/2013 - 15:49 | 3428074 Winston Churchill
Winston Churchill's picture

Those semi auto HB's are the worst.

Complete ban on pencil sharpeners, for the children.i

Tue, 04/09/2013 - 15:24 | 3427904 HelluvaEngineer
HelluvaEngineer's picture

Somebody is missing out on the party.

Tue, 04/09/2013 - 16:05 | 3428167 SheepDog-One
SheepDog-One's picture

All those leaving now will be called the 'geniuses' later when all the other muppets are trying to panic rush for the chainlocked door.

Tue, 04/09/2013 - 20:43 | 3429135 michigan independant
michigan independant's picture


Tue, 04/09/2013 - 15:24 | 3427910 DoChenRollingBearing
DoChenRollingBearing's picture

So many want return of capital, so they are OK with low return on capital.

I agree, but I mourn the loss of good income generating investments...

Tue, 04/09/2013 - 15:37 | 3427981 chdwlch1
chdwlch1's picture

Todays investment environment = return free risk.

Tue, 04/09/2013 - 16:10 | 3428193 waviator
waviator's picture

"Return-free risk". Good one, but don't forget to credit the source. Jim Grant

Tue, 04/09/2013 - 17:11 | 3428468 chdwlch1
chdwlch1's picture

Couldn't remember the source...thought it was Kyle Bass, but wasn't sure.

Tue, 04/09/2013 - 15:38 | 3427988 spastic_colon
spastic_colon's picture

gotta sell to pay taxes.....willing to dump "low" yielding junk and take the gain

Tue, 04/09/2013 - 15:25 | 3427918 fonzannoon
fonzannoon's picture

speaking of outflows, i hope tyler can verify that outflow article about the comex.

Tue, 04/09/2013 - 15:29 | 3427927 Dr. Engali
Dr. Engali's picture

"Investors"....now there's a quaint old word that brings back some memories.

Tue, 04/09/2013 - 15:39 | 3427994 ekm
ekm's picture

TSX here in Toronto is going koooo koooo.



Blood is coming. There was no huge commodities price increase, nothing. TSX is a commodities stock exchange.


Tue, 04/09/2013 - 15:28 | 3427934 resurger
resurger's picture

Dont worry Tyler, 380Million will be re-invested in AAPL, Bitcoin or ES futures.

Tue, 04/09/2013 - 15:31 | 3427943 q99x2
q99x2's picture

I'm thankful and appreciative for all that is good in this day.

Tue, 04/09/2013 - 15:32 | 3427945 Devils Advocate
Devils Advocate's picture

330 ramp today?  Lets take out the all time high 1576!!

Tue, 04/09/2013 - 15:41 | 3427999 spastic_colon
spastic_colon's picture

and just when i entered my chance at the 26.6% annualized returns, the markets decide to reverse ramp / s

Tue, 04/09/2013 - 15:33 | 3427954 DCFusor
DCFusor's picture

The instance you highlight was NOT a leading indicator - it was a correlation in zero time lag.  No, actually the S&P was ALREADY going down, and JNK followed.

Whether S&P falls to match JNK, or JNK catches up to S&P is an exercise best left to the student.

I happen to believe in the former, but it's for entirely other reasons.  JNK acts more like a stock than a bond anyway, it's not representative of higher quality bonds at all.

Slow news day?


Tue, 04/09/2013 - 15:38 | 3427989 Hippocratic Oaf
Hippocratic Oaf's picture

Don't you have a Volt car fire you have to put out?

Tue, 04/09/2013 - 15:53 | 3428088 DCFusor
DCFusor's picture

Nope, hypocrite, it's sitting in the drive, getting ready for a beer run later.  Fully charged up on solar power created on site.  Do sour grapes make you feel better?

Tue, 04/09/2013 - 15:40 | 3427990 Dr. Engali
Dr. Engali's picture

In other news....The Chevy Volt is still a piece of shit.

Tue, 04/09/2013 - 15:54 | 3428101 DCFusor
DCFusor's picture

IN other news, it's obvious you know jack about them and haven't driven one, or even asked other owners about that.  No one's selling them back or terminating leases - for some reason.  Facts talk, bullshit walks.  Have a nice day.

Tue, 04/09/2013 - 15:57 | 3428125 Poetic injustice
Poetic injustice's picture

Amount of boring trolls is growing daily. *yawn*

Tue, 04/09/2013 - 16:20 | 3428244 spastic_colon
spastic_colon's picture

leading indicator?

Tue, 04/09/2013 - 16:22 | 3428255 MichiganMilitiaMan
MichiganMilitiaMan's picture

Correct.  Most haters I have seen here in last 3 years.  Has CNBC website posted a link to ZH?

Tue, 04/09/2013 - 16:06 | 3428164 Dr. Engali
Tue, 04/09/2013 - 16:41 | 3428337 Goldilocks
Goldilocks's picture

Who Killed The Electric Car
http://www.youtube.com/watch?v=IENnSK8Q6nE (1:32:27)

Tue, 04/09/2013 - 16:11 | 3428204 ceilidh_trail
ceilidh_trail's picture

DC- To each his own. Drive what you wish as you earned the $$$ to do so. This is still a free country. I never had much respect for hybrids, etc. But, my brother has been driving a hybrid Escape for 7 years and the thing has held up well. Myself, I like a bigger vehicle. If it came as a hybrid and could haul/tow what I need and didn't fall apart and was decently priced with a decent warranty, I'd buy one. My issue is I bought a GM (Chevy Impala) car that has had to have the head gaskets replaced twice due to Dexcool.. GM never compensated me a dime. I would have a tough time buying ANYTHING GM again. Ford or foriegn, I'd take a chance... Didn't you buy a Camaro a couple of years ago also? If so, do you still like it?

Tue, 04/09/2013 - 19:49 | 3428985 NoDebt
NoDebt's picture

Nah nah nah.  Not on the Volt.  Buy what you like, yes.  But the price on the Volt is subsidised by the government by THOUSANDS of dollars ($8000 comes to mind??).  Let it price in the market where it ordinarily would and THEN you can buy one if you like.  Otherwise, we just helped him buy a car.  Which makes him smarter than us, I guess.  But definitely more sanctimonious.

Tue, 04/09/2013 - 16:26 | 3428268 MichiganMilitiaMan
MichiganMilitiaMan's picture

Had to pass a Chevy Volt just the other day, in town, it was only going 16-18mph!

Tue, 04/09/2013 - 15:44 | 3428016 spastic_colon
spastic_colon's picture

you typed in wrong website you were looking for www.sniffing-krugmans-ass.gov

Tue, 04/09/2013 - 16:08 | 3428183 SheepDog-One
SheepDog-One's picture

What higher quality bawnds, the UST's that the FED itself now has to buy 100% of?

Tue, 04/09/2013 - 15:41 | 3427998 Hongcha
Hongcha's picture

These children going wild with pencils; it is the drugs their parents are giving them.  And that includes iphones and all other PDAs.  The West is doomed.

Tue, 04/09/2013 - 15:59 | 3428131 Poetic injustice
Poetic injustice's picture

Any child caught with pencil in his hand and without proper permit, should be jailed and fined.

Tue, 04/09/2013 - 15:43 | 3428007 Doomer
Doomer's picture

Pshaw.  Don't stop believin'!

Tue, 04/09/2013 - 15:45 | 3428041 Zexe
Zexe's picture

dont you get it that what is happening is 85 billion/month forever has fundamentally altered the world of finance and now we re living a different model altogether. nothing like this has ever happened before, we are living a grand experiment and nobody knows where this is going to get us, one thing for sure everything we know is now garbage, new age new model.

Tue, 04/09/2013 - 15:47 | 3428043 rubearish10
rubearish10's picture

Let's see a 9% drop in S&P is equivalant to another new high in today's terms. Forget last year or any reference data on this one.....sorry to say but true, for now.

Tue, 04/09/2013 - 16:08 | 3428190 SheepDog-One
SheepDog-One's picture

Yea when you're in totaly uncharted waters like we are now, old navigation maps mean jack shit.

Tue, 04/09/2013 - 15:49 | 3428059 rubearish10
rubearish10's picture

PM's still capped. Full Monte for Banksters!

Tue, 04/09/2013 - 17:19 | 3428495 Thought criminal
Thought criminal's picture

This will be the biggest crash ever. Central banks run by madmen who compete with each other at debasing the currencies and pouring incredible amounts of money into the system. The central bank in my country that was always deemed to be conservative slashled interest rates to almost zero too recently.

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