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This Is The Longest Streak Of High-Yield Outflows On Record (And Why It May Get Worse)

Tyler Durden's picture




 

When we first brought the market's attention to high-yield credit's flashing red warning, it was shrugged off as unimportant by most - stocks are rallying so who cares (even though we explained in detail why equity investors should care). Now that the mainstream media has all become high-yield bond experts we thought it worth considering how much worse this could get. As Barclays notes, for those keeping track, retail funds have thus far seen 22 consecutive days of redemptions for a total of $16.9bn in assets - the longest streak in history and while the effect of retail selling on valuations has not been negligible, it has also not been proportionate to the magnitude of the outflows (yet).

 

 

In other words - the 2-3% drop in index prices is well short of the 6-7% drop one would expect from the outflows which suggests if selling pressure persists managers will be forced to sell their more illiquid bonds (having unwound the liquid winners) into a market that is as illiquid as it has ever been (for sellers).

 

*  *  *

As we noted previously, you were warned:

High-Yield Bonds "Extremely Overvalued" For Longest Period Ever

 

High Yield Credit Market Flashing Red As Outflows Surge

 

Is This The Chart That Has High-Yield Investors Running For The Hills?

*  *  *

But something changed recently...

Between a sudden shift to a preference for "strong" balance sheet companies over "weak" balance sheet companies (the end of the dash for trash trade), and this rotation from high-yield to investment-grade, it is clear that investors are positioning defensively up-in-quality ending the constant reach-for-yield trade of the last 5 years.

 

Why should 'equity' investors care? The last few years' gains in stocks have been thanks massively to record amounts of buybacks (juicing EPS and also providing a non-economic bid to the market no matter what happens). This financial engineering - for even the worst of the worst credit -  has been enabled by massive inflows into high-yield and leveraged loan funds, lowering funding costs and allowing CFOs to destroy/releverage their firms all in the goal of raising the share price.

 

Simply put - equity prices cannot rally for long without the support of high-yield credit markets - never have, never will - as they are both 'arbitrageable' bets on the same capital structure. There can be a divergence at the end of a cycle as managers get over their skis with leverage and the high yield credit market decides it has had enough risk-taking... but it only ends with equity and credit weakening together. That is the credit cycle... it cycles.

Simply put, Jeff Gundlach was right.

*  *  *

Of course we have explained this won't end well...

US corporates saw profit growth slow to almost zero last year and on an EBIT basis it has been flat for some time now. Earnings quality, rather than improving is actually deteriorating, as indicated by the increasing gap between official and pro-forma EPS numbers. As a consequence, following a long period of overspending and in the absence of a strong pick-up in demand, corporates will have to spend less and not more.

 

Finally, as a consequence of such anemic growth, corporates have been gearing up their balance sheets in an effort to sustain EPS momentum via the continuing use of share buybacks. With markets up substantially in 2013 executing those share buybacks has become increasingly expensive. Little wonder companies have to borrow so much to continue executing them.

 

 

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Sat, 08/09/2014 - 21:26 | 5071476 Greenskeeper_Carl
Greenskeeper_Carl's picture

Is there a bond out there that isnt overvalued? all of them are priced as they are based on highly manipulated interest rates. loaning money to bankrupt govts or companies for interest rates lower than real inflation isnt going to end well

Sat, 08/09/2014 - 21:28 | 5071486 zorba THE GREEK
zorba THE GREEK's picture

He who sells first sells best

Sat, 08/09/2014 - 22:07 | 5071605 Pladizow
Pladizow's picture

Yet the high yield short ETF's have not moved?

Sat, 08/09/2014 - 22:37 | 5071695 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The theater is burning and the few escaped. Good luck to rest of the investors!

Sun, 08/10/2014 - 03:19 | 5072098 Elvis the Pelvis
Elvis the Pelvis's picture

Everything is going to start getting worse now.  We reached Dow 17,000.  The markets have peaked.  Now comes the deflationary nightmare.  Bitchez.

Sat, 08/09/2014 - 22:58 | 5071745 ObamaDepression
ObamaDepression's picture

Very soon.

The Obama Depression is about to enter part 2.

Sun, 08/10/2014 - 02:46 | 5072062 Squid-puppets a...
Squid-puppets a-go-go's picture

why this news is important:

Its not so much about the end of kicking the can, its about a leg being broken: they are ceasing to have the ABILITY to kick the can

 

Sat, 08/09/2014 - 21:34 | 5071510 zorba THE GREEK
zorba THE GREEK's picture

This isn't going to end well

Sat, 08/09/2014 - 21:41 | 5071529 NYPoke
NYPoke's picture

It will, if you are short...the market that is.

Sat, 08/09/2014 - 23:01 | 5071751 ObamaDepression
ObamaDepression's picture

Its the timing that's a bitch.

Sat, 08/09/2014 - 23:25 | 5071816 NYPoke
NYPoke's picture

Yes, it is.  Would be nice to get a bigger down draft in August & hit the top in October.  It is what it is though.

Sat, 08/09/2014 - 23:07 | 5071768 ObamaDepression
ObamaDepression's picture

Its the timing that's a bitch.

Sun, 08/10/2014 - 01:10 | 5071962 good man
good man's picture

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do... http://goo.gl/bhiamE

Sun, 08/10/2014 - 02:47 | 5072064 Squid-puppets a...
Squid-puppets a-go-go's picture

Tyler? Just take him out, please

Sun, 08/10/2014 - 03:59 | 5072123 rogerramjet
rogerramjet's picture

get off this blog u ass...........

Sun, 08/10/2014 - 09:51 | 5072395 photonsoflight
photonsoflight's picture

How many tricks do you do and exactly whats involved? Whips, chains etc?

Sat, 08/09/2014 - 21:26 | 5071483 The Phallic Crusader
The Phallic Crusader's picture

arent the redemptions largly going into equities?

Be nice to see what's going on with HY mutual funds...  too lazy to try to look into it right now, obviously a lot of these bonds are in hy funds - are the funds swapping out for security?  I don't know.

 

All I know is buying long term debt is for 'tards.

Sat, 08/09/2014 - 21:30 | 5071489 ekm1
ekm1's picture

Cluelessness of Zerohedge continues unabated.

Zerohedge still assumes that there is an actual market and all is interconnected as if there were free market.

Zerohedge still believes in ......cycles.

 

Let me tell what is happening:

A human made system stays up and goes down by humans.

If central command called government decides that they do not like cycles, then cycles are simply banished and economy become centralised. No credit needed, just food stamps and gov subsidies.

 

We are there.

Which of course leads to break down of supply chains, which is under way.

Sat, 08/09/2014 - 21:33 | 5071501 The Phallic Crusader
The Phallic Crusader's picture

huh?

Sat, 08/09/2014 - 21:34 | 5071508 ekm1
ekm1's picture

Otherwise known as communism.

 

Sat, 08/09/2014 - 21:44 | 5071536 Greenskeeper_Carl
Greenskeeper_Carl's picture

not saying you are wrong, but pointing out that there are actual investors(people, not institutions) leaving these funds doesn't neccessarily mean any kind of cycle has to be involved. In fact, this type of article could prove you right. These types of outflows occuring while the bonds themselves still remain unrealistically priced could give yet another example of the fact that there is no 'market' anymore, and "someone" is propping them up

Sun, 08/10/2014 - 02:06 | 5072044 FreedomGuy
FreedomGuy's picture

I suggest there are no markets at all any more. There are only gambles. All are government manipulated frauds. If you can invest in between the government manipulations you win. I suspect if you use any traditional templates you will lose.

Sun, 08/10/2014 - 02:52 | 5072067 Squid-puppets a...
Squid-puppets a-go-go's picture

EKM1

as long as this govt that you falsely presume to be omnipotent uses the framework of ursury and fractional reserve banking, there will be cycles.

They can be distorted, skewed, delayed and exacerbated. But not eradicated. Not unless ursury and leverage are both outlawed. period.

Sun, 08/10/2014 - 07:28 | 5072232 espirit
espirit's picture

If anyone has been following ekm's posts, his analysis delves deeply into crisis at hand.

Critical thinking skills must be utilised to peel back the layers of subterfuge covering ongoing events.

Go For It EKM1 - Do Not Underestimate Your Enemy.

Sat, 08/09/2014 - 21:50 | 5071556 Keyser
Keyser's picture

And what is the definition of insanity?

Sun, 08/10/2014 - 09:57 | 5072402 photonsoflight
photonsoflight's picture

Electing bush and obama for a second term?

Sun, 08/10/2014 - 12:06 | 5072709 barre-de-rire
barre-de-rire's picture

he just read 1984

Sat, 08/09/2014 - 21:47 | 5071545 ekm1
ekm1's picture

THEOREM

 

If the financial system is allowed to go through a wipeout (and it will), then this will be a highly positive event for the real economy, employment and prosperity.

Sun, 08/10/2014 - 01:33 | 5072014 world_debt_slave
world_debt_slave's picture

mushroom clouds before TPTB allow that to happen.

Sun, 08/10/2014 - 09:59 | 5072408 photonsoflight
photonsoflight's picture

In which case construction , and the medical industry will boom even more. Go long on indoor hydroponic food also.

Sun, 08/10/2014 - 23:37 | 5074959 TheReplacement
TheReplacement's picture

Aw that's just great!  I love a happy ending.  In other news Kim's ass got even bigger.  Leading scientists are puzzled over how the rest of the matter in the universe is not being sucking by its gravitational mass.  Next up, we'll speak with Stephen Hawking, no pun intended, about the meaning of nothing and why he should just shut the hell up.  Okay, that pun was intended.  You got me.  And now the weather...

Que girl with immense boobs and tiny waist.  Yay weather.

Sun, 08/10/2014 - 00:32 | 5071912 F0ster
F0ster's picture

So you're saying it's different this time?

Sun, 08/10/2014 - 16:38 | 5073457 ekm1
ekm1's picture

Not all all.

In communism we banished cycles until we ran out of food

Sun, 08/10/2014 - 11:51 | 5072665 moneybots
moneybots's picture

"Zerohedge still believes in ......cycles."

Cycles are a mathematical fact.

 

"If central command called government decides that they do not like cycles, then cycles are simply banished and economy become centralised."

 

 Cycles cannot be banished, as the laws of math cannot be banished.

 

 

Sun, 08/10/2014 - 23:33 | 5074952 TheReplacement
TheReplacement's picture

So when all of this malinvestment leads to the break down of supply chains you are saying that is not the non-existent market reacting?  I'm confused.

Sat, 08/09/2014 - 21:30 | 5071492 NoDebt
NoDebt's picture

If somebody is selling, there has to be somebody on the other end buying.  Even ZH has had many articles about the fallacy of "money on the sidelines".  The only question is the price at which the transaction takes place.  Which hasn't moved much.  Which means they're just changing hands.  Tell me who's BUYING at these still-elevated prices and I'm all ears.

Sat, 08/09/2014 - 21:31 | 5071498 ekm1
ekm1's picture

Almost all ZH articles talk about outflow.

And .....where did the money go?

Sat, 08/09/2014 - 21:41 | 5071526 fonzannoon
fonzannoon's picture

http://finance.yahoo.com/q/bc?t=5y&s=HYG&l=on&z=l&q=l&c=spy&ql=1

 

I dunno....if you pull these charts back far enough it just seems like business as usual.

Sat, 08/09/2014 - 21:44 | 5071537 ekm1
ekm1's picture

Recycling, recycling, recycling to keep people busy, Fonz, as if there is something going on.

Until world actually drops USD entirely.

 

Watch out for executives lying dead on streets

Sat, 08/09/2014 - 21:51 | 5071560 ekm1
ekm1's picture

http://seekingalpha.com/article/2375215-the-fed-to-pay-foreign-banks-to-...

Recycling and recyling Fonz, until central command says no.

As an example, that will occur for sure when Saudis would refuse to ship oil unless QE is fully unwound and an wipeout is engineered

Sat, 08/09/2014 - 21:59 | 5071584 fonzannoon
fonzannoon's picture

well QE is just about unwound. Yields are dropping. Most big firms are skittish and have a decent amount allocated to cash and bonds. So yields are low. Stocks are taking a breather. Gas by me is down to $3.65.

Look if there really is some kind of back room war going on and the dollar loses then it's hyperinflation. If the dollar wins I think that means just more of the same. Other countries just continue to get crushed and suffocated due to lack of dollars.

Sat, 08/09/2014 - 22:02 | 5071592 ekm1
ekm1's picture

No. Officially QE is being reduced, not unwound.

Unwound would mean selling of Fed balance sheet.

 

And no, QE is not being reduced, it has been increased via other central banks by use of unlimited currency swaps that nooooobody is talking about.

http://www.federalreserve.gov/newsevents/press/monetary/20131031a.htm

 

Hence, Financial Aggression, hence wars expanding around the world.

 

QE = Financial Aggression on world real assets.

World is responding with showing middle finger to Obama who has ordered QE

Sat, 08/09/2014 - 22:12 | 5071620 fonzannoon
fonzannoon's picture

"The Canadian government confirmed on Thursday that it raised 1 billion Canadian dollars ($938.1 million) by reopening its December 2064 bond, in a move to lower borrowing costs.

Thursday's offering size was double the minimum amount targeted, a sign that demand was strong, as investors sought a haven against global market volatility amid growing concerns over the strength of the economic recovery in Europe."

The 50-year bond issue was priced better than expected to yield 2.76%. The bond carries a coupon interest rate of 2.75%."

Sure seems like same as it ever was man. Every countries borrowing costs dropping as their debt expands. Currencies all falling into lock step with each other...

Sat, 08/09/2014 - 22:19 | 5071637 ekm1
ekm1's picture

What is doesn't say is who bought those bonds, investoers or bank of canada?

 

Secondly, manipulating money supply has got nothing to do improving the economy.

That has got nothing to do with costs of funding the govewrnment.

 

Government is funded by the output of the people, not by money it can create on computers

If people refuse to create output just because gov guarantees everything, then there is no funding.

 

In communism we had infinite funding with paper. We just couldn't produce enough food for everybody

Sat, 08/09/2014 - 22:21 | 5071646 fonzannoon
fonzannoon's picture

when was any of this ever about improving the economy? This was never about improving the economy. The economy can not be improved. Between globalization and automation and crony capitalism etc etc...the economy is still right on it's natural path towards being obliterated. The only question is can we have a 1% world with the next 7-8% below them doing pretty well licking their heels and then a gigantic free shit army, or do we need ebola to take down 60% of the population. 

Sat, 08/09/2014 - 22:24 | 5071659 ekm1
ekm1's picture

:-)

Sat, 08/09/2014 - 23:10 | 5071777 Greenskeeper_Carl
Greenskeeper_Carl's picture

i like both of yall, and im glad ekm is back(read comments a long time before i started posting, so i remember you from a while back), but don't you guys know each other, as in not just on here, so these posts with yall agreeing with each other are kinda pointless, since you could just have this conversation in person?

Sat, 08/09/2014 - 23:13 | 5071783 ekm1
ekm1's picture

No, we don't.

 

Sat, 08/09/2014 - 23:14 | 5071787 fonzannoon
fonzannoon's picture

are you referring to ekm and I? we have never met. Ekm is a good guy though, i have no doubt of that.

Sat, 08/09/2014 - 23:25 | 5071818 Greenskeeper_Carl
Greenskeeper_Carl's picture

sorry, i thought thats who you were talking about when you said you talked to a person who had been banned from here. now i feel like an asshole

Sun, 08/10/2014 - 07:32 | 5072239 espirit
espirit's picture

His name was francis_sawyer?

Sat, 08/09/2014 - 22:20 | 5071648 NoDebt
NoDebt's picture

I hope it's central banks buying everything (not just sovereign debt).  Means the price will never decline much, no matter how big the "outflow" from ETF funds.

 

Sat, 08/09/2014 - 22:27 | 5071665 ekm1
ekm1's picture

Exactly.

Until world stops doing real trade with USA and the whole west

 

Misery, misery, misery

Sat, 08/09/2014 - 22:35 | 5071689 Greenskeeper_Carl
Greenskeeper_Carl's picture

the misery(for the west, not just the US) is what will happen when people are no longer willing to give us real things in exchange for dollars we create out of thin air, billions at a time

Sat, 08/09/2014 - 22:39 | 5071697 ekm1
ekm1's picture

already under way

That's what currency swaps with china are for

Sat, 08/09/2014 - 23:34 | 5071838 Greenskeeper_Carl
Greenskeeper_Carl's picture

this is just curiosity, not defending the petrodollar scheme but...

How does this matter when the EU countries are still using dollars to buy energy, the saudis still only sell oil for dollars, and OPEC still deals in dollars?

Sat, 08/09/2014 - 23:45 | 5071855 ekm1
ekm1's picture

World trade matters.

Once most of their trade is handled in non-usd currencies, barter, then dumping USD just becomes natural and swift, just baaam

Sun, 08/10/2014 - 10:36 | 5072485 WhyWait
WhyWait's picture

"In communism we had infinite funding with paper. We just couldn't produce enough food for everybody".  

So the lines for food indicated.  Did you watch this first hand?  Have you been thinking and reasoning about it since then?

Even the US has never provided enough food for everyone, even if massive amounts of food have to be thrown away to maintain that state.  Millions of volunteers then participate in raising and distributing food at free pantries and kitchens.  And as the US continues to master the art of producing food ever cheaper with ever less labor the whole country is gradually sickening on this nutritionless, poison-laden crap.  

The deep politics and economics of food, food production and food scarcity is a whole fascinating subject.  There's a whole literature which I've barely skimmed the surface of.  But we still beat "communism" over the head because they failed on food production.

Experts say that it is not too late for the Earth to support its human population with nutritious food.  And it's not rocket science.  But it will have to be much more labor intensive to work.  Which goes directly hard against the imperative of corporate capitalism, and against the communism that Stalin built whose imperative was competetion with capitalism.

Sat, 08/09/2014 - 22:04 | 5071601 ekm1
ekm1's picture

http://www.federalreserve.gov/newsevents/press/monetary/20131031a.htm

 

Other central banks are getting dollars and buying USTs, so they can re-route USD to bank lobby in order to disallow defaults on swaps which are still ongoing and rampant.

 

That was the whole point of QE: Monetization of Gambling with Swaps

Sat, 08/09/2014 - 22:19 | 5071643 Greenskeeper_Carl
Greenskeeper_Carl's picture

since the fed isnt subject to the FOIA they can create money, give it to some nation, anyone, i don't knoe who, but lets say belgium, and have them buy a shit load of USTs so it isnt the fed officially buyin them through QE? something like that?

Sat, 08/09/2014 - 22:25 | 5071661 ekm1
ekm1's picture

correct

Any of those countries can do swaps and buy USTs

Sat, 08/09/2014 - 23:22 | 5071807 Greenskeeper_Carl
Greenskeeper_Carl's picture

i get your point, and im not disagreeing with it, but the yen isnt the worlds reserve currency, and their bond market is even more central bank controlled and manipulated than ours, and yet it still exists, and is accepted in trade agreements as the currency as one of the worlds largest economies. unless and until the JBG collapses and is traded at its real value(a small fraction of what it is worth now) this ponzi scheme will continue.

Sat, 08/09/2014 - 22:27 | 5071663 NoDebt
NoDebt's picture

There is nothing stopping them from doing exactly that, that I am aware of.

Sat, 08/09/2014 - 22:28 | 5071669 ekm1
ekm1's picture

Even assuming that there were a low that would forbid it, then Obama would sign an executive order which Boehner and Reid would instantly approve and baaaam, all legal

Sat, 08/09/2014 - 22:32 | 5071680 NoDebt
NoDebt's picture

The only law I'm aware of in this arena is one from the late 40s/early 50s that prohibits the Fed from buying US Government bonds directly from the Treasury.  Buying from anyone else is fair game.

Sat, 08/09/2014 - 21:42 | 5071533 ebworthen
ebworthen's picture

Leveraged dark pool funds.

When SHTF they crash everything, then get bailed out or it's "tanks in the streets".

Sat, 08/09/2014 - 21:44 | 5071534 ekm1
ekm1's picture

Or executives dead on streets

Sat, 08/09/2014 - 21:48 | 5071550 Greenskeeper_Carl
Greenskeeper_Carl's picture

Ill tell you. People who are able to borrow money at 0% interest and make risky bets, and if those bets go wrong, they will be bailed out at taxpayer expense because they are 'too big to fail', and the people who made these risky moves will still get their bonuses, and any penatly that is levied against them will be paid for by the institution they work for and their shareholders, which, in the end, really just means taxpayers

Sat, 08/09/2014 - 22:23 | 5071658 ebworthen
ebworthen's picture

Bingo!  Winner winner, chicken dinner!

If we could only convince the somnolent populace of the truth.

Sat, 08/09/2014 - 23:02 | 5071756 Savyindallas
Savyindallas's picture

Yes  -the buyers are highly leveraged computers. The buying and selling is pure manipulation. It will end very badly.

Sat, 08/09/2014 - 22:58 | 5071746 Bemused Observer
Bemused Observer's picture

Yeah, but they're buying for less and less as the price drops. Good for them, bad for sellers. Losses are real, the positions don't just cancel each other out.

Sun, 08/10/2014 - 00:59 | 5071948 Bernankenstein
Bernankenstein's picture

Not a fallacy. While there is a seller and buyer, the "new" money sets off a chain of more buying as those who sold, and were in the market already, will quickly use the funds to buy other stock. It will increase buying pressure and tend to lift prices over time. 

Sun, 08/10/2014 - 09:17 | 5072357 Winston Churchill
Winston Churchill's picture

Pension funds prolly.Or bagholders for short.

Sun, 08/10/2014 - 23:38 | 5074963 TheReplacement
TheReplacement's picture

Technically, you are Mr. Taxpayer.  Want fries with that?

Sat, 08/09/2014 - 21:32 | 5071497 ebworthen
ebworthen's picture

Blow bubble, pop it.  Blow bubble, pop it. 

Remember doing that as a kid?  Who could blow the biggest bubble?

The winner invariably had the bubble pop and stick to their face.  Then they needed new gum.

Sat, 08/09/2014 - 22:41 | 5071681 db51
db51's picture

New Gum?  W T F.   We couldn't afford new gum, so we just had to keep blowing with hair and eyebrows in it.  Actually made it stronger with all the extra fibre.  Sort of conditioned us for our teen years...finding that first hair in our mouth.

Sat, 08/09/2014 - 21:33 | 5071505 DirkDiggler11
DirkDiggler11's picture

Screw stocks, bonds, and about every other "market". Physical Gold, Silver, Lead and food are my only "investments". Yes, the PM markets are rigged like a game of 3 card Monty, but they are rigged in MY favor.

Our corrupt ass Fed is keeping PM's on sale for an extended period of time, allowing me to sfock up ! Thank you Fed Chairmen, you magnificent stupid bastards !

Sat, 08/09/2014 - 23:11 | 5071780 disabledvet
disabledvet's picture

Again "the only way to win is not to play."

This isn't what we paid the Government to do...but our job is to act accordingly not play pretend that somehow things would have turned out differently.

Sat, 08/09/2014 - 21:40 | 5071524 Ban KKiller
Ban KKiller's picture

Non GAAP and underpaid criminal accountants fueled by cocaine and blow jobs by Banksters will save the day. 

The fascist ruling oligarchy is out on the open but who licks their boots? Attorneys and accountants who have sold their souls. 

Sat, 08/09/2014 - 21:48 | 5071552 TeamDepends
TeamDepends's picture

Who licks their boots?  JYAAP (Janet Yellen Accepted Accounting Principles) that's who.

Sat, 08/09/2014 - 22:29 | 5071672 db51
db51's picture

and this effects me how?

Sat, 08/09/2014 - 22:47 | 5071717 q99x2
q99x2's picture

Good the Central bankers are allowing everyone to get out in an orderly fashion as they buy up the entire planet with fiat. Wonderful.

Sun, 08/10/2014 - 00:23 | 5071904 himaroid
himaroid's picture

I will see you guys on the other side.

Sun, 08/10/2014 - 04:20 | 5072132 CHX
CHX's picture

I guess Draghi et al. need to step up to the plate soon to fill the vacuum... ("whatever it takes").  The ultimate unwind of the global bond bubble with artificially low interest rates across the yield curve (thanks printing presses!) will be the death knell of the current financial fiat ponzi system. 

Sun, 08/10/2014 - 05:30 | 5072156 CHX
Sun, 08/10/2014 - 10:30 | 5072472 photonsoflight
photonsoflight's picture

Don't worry. TPTB have another system lined up after they crash this one. If you get the mark on your arm you shall toil, if on the forehead then your a boss. They have to crash this system in order to institute the new slave system they have designed. If you don't play, then, you might get a sore throat.

Sun, 08/10/2014 - 06:54 | 5072195 Watson
Watson's picture

Every time retail sells/buys an asset in size, that asset goes up/down...

Sun, 08/10/2014 - 07:00 | 5072202 damicol
damicol's picture

The ultimate holy grail of bubbles is the hyperinflation bubble .

 

 And we are nearly there now .

 The incomparable stupidity, OR genius depending where you come from, is the idea to destroy FICO scores.

What is currency worth when you lend it to an underachieving moron  who cant flip burgers without burning his fingers.

 How much do you value it at when the prospects of getting back are so slim.

Pretty much worth less in my estimation, so I would want a fucking load more of to offload to the next greater fool.

And by the way I will need a whole lot more of this worthless tat in my wallet before i get out of bed.

And you want to buy anything from me. from a can of beans to my fucking house, I will definately want  more of this worthless tat.

Some desperate fools might  sill be selling assets like beans  and taking the crap in exchange but its starting now, and it will not take too long before it  explodes.

They hid it massaged it  lied about it and finally made it illegal to talk about it, but inflation is here and its growing and its growing far faster than many will believe.

Its the only bubble left in town and  when all the other bubbles are popping like crackers on July 4th  then this becomes the biggie.

As a matter of course I overcharge by at least 25 % and negotiate hard from that starting point.

And it gets easier, and when that gets too easy I will ramp prices up again by another 25%

 

Sun, 08/10/2014 - 11:25 | 5072599 SilverMoneyBags
SilverMoneyBags's picture

High yield bonds just have more risk. A shift away from them isn't necessarily a negative sign for the economy.

Sun, 08/10/2014 - 19:01 | 5074053 thesheet
thesheet's picture

Isn't this about the time when Martin Armstrong's Economic Confidence Model TM takes a nose dive all the way until 2020?

 

Actually, he had it peaking in 2015, then "look out below......"

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