WTF Chart Of The Day

Tyler Durden's picture

With stocks at record highs, ongoing commentary that retail is back and will lift all boats to infinity and beyond, it seems the professionals in the credit market are not amused. We have noted the ongoing divergence between the asset-classes for two weeks now but with today's ultra-low volume drift higher in stocks, the drop in high-yield bonds is even more notable. The question we have is - as we have explained in great detail before - if rates for leveraged firms is rising, how will management maintain their exuberant re-leveraging to buoy their stock prices in the face of crushing top-line deflation?



Credit is now at 4-week lows (high yields and spreads) as stocks push on - these 'decouplings' never last...

Remember corporate credit risk reflects just as much on the underlying business volatility and cashflow outlook as the equity part of the capital structure. There are periods in the credit cycle when credit will underperform as management relevers (i.e. buybacks/dividends) but that always only lasts a brief time as credit begins to penalize those actions, making the re-levering non-economic, and an over-expectant equity market reverts back to a less-levered reality.

As we noted before,

The bottom-line is that the credit-cycle cannot be hidden forever - unless we can rest assured that even if the Fed does 'Taper' it will rapidly 'un-Taper' soon after as the gross misallocations of capital (rise in liabilities - which will not drop - against an artificial rise in assets - which will fall)...

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Caveman93's picture

All I know is the company my wife works for just refinanced their corporate debt which was a little over 3/4 of a billion dollars at 9.75%. That's got to fucking hurt somewhere...right? I sure wouldn't want to pay that on a balance of anything right now.

pemdas's picture

I think she should seriously consider looking for another job.

Caveman93's picture

Naw...told her to hold out and get funemployment fiat. ;)

Village-idiot's picture

You're wife's employer may be a lot smarter than you think; many companies are doing the same, namely paying 8-10% interest now, rather than even higher interest rates later. Consider, the true inflation rate is now about 8-9%. Ignore that phoney CPI government fudged BS.

There isn't going to be a "tapering" of the currency creation. The Fed will most likely increase the printing to even higher levels as interest-rates start to rise. It won't work; but they'll try it anyway.

I have a feeling that, in a couple of years 9.75% will look cheap.

omi's picture

Not a fking chance in the world. Zero fo-eva!

Cdad's picture

Another entirely illiquid trading day.  Just abysmal.  And today...Ben Bernanke has forsaken us.  

LawsofPhysics's picture

Credit will catch up, the bernanke has truly fucked with rates long enough...


vote_libertarian_party's picture buy buy?

Sudden Debt's picture

actually, if you look to the august part, yes it's a buy for a 3% spike that's comming

Id fight Gandhi's picture

Buy the taper dip.

If taper, then correction, then new fed chair to release more QE.

The debt ceiling, ACA in force, and taper or not meetings, are still not factored into anything.

undercover brother's picture

In other words, the fed has their backs up against the wall and QE is here to stay, because the consequences aren't palatable.    

LawsofPhysics's picture

Unfortunately, there is only room for one "Japan" on this planet...

Now things get interesting as the world is told continually about how much things are improving...


good luck with that.

Colonel Klink's picture

HY is telling the S&P to get ready to grab its ankles.

999.9's picture

Don't forget that the Fed makes money from U.S. growing debt, this is why the banks they own deliberately caused the subprime crisis.
Don't forget it, write it on your walls.

LawsofPhysics's picture

add to that the fact that the earth is using a "debt-is-money" system and it becomes a "win-win" for the banking cartels and their government kleptocracies.

World of Debt's picture

It's OK, just see JIM CRAMER'S TERRIBLE STOCK PICKS--MUST SEE!! Hilarious Video below:

DCFusor's picture

Well, I thought it was funny, myself.  I got asked at the bank if I followed Cramer, while I was busy depositing some of my winnings.  I said, yeah, I fade the guy.  I don't think they got it.  Heck, he's almost as good as Stolper.

Haager's picture

BTFD on ATH, why bother anyway?

I just wait for the sell-target to be reached - could be tomorrow or wednesday, and on Friday I recommend to be long into the full-moon.

Winston of Oceania's picture

Soon the currency wars will be going full on and the trade wars will begin, next comes lead tossing...

razorthin's picture

If it were true, and if these pumper coxxukkers were honest, they would confess that return of the retail investor portents curtains for the market.