Yesterday we highlighted the dot-com-esque surge in earnings-less IPOs [3] in the last few months. Today we point out two more Yellen-ignoring bubble-implying charts that must surely be ignored by the cognoscenti of all-knowing stock market gurus.
Via Pater Tenebrarum of Acting-Man blog, [4]
Leveraged Loans, Penny Stocks and Profitless IPOs
Sentimentrader has posted a few updates recently that show that financial froth is quite out of bounds by now. For instance, the share of IPOs of money losing companies over the past six months has soared back to the highs last seen at the top of the technology mania in 2000 [3]. A full 74% of all IPOs issued over the past half year were in companies that are making losses. The securities of such companies bereft of income of course all tend to soar right after they hit the market.
In another update, it was pointed out that the value of trading in penny stocks has soared to a multi-year high:
[5]
Penny stock trading soars - click to enlarge.
Admittedly, a similar spike in 2013 subsided quickly and didn't turn out to mean anything, but since then there have been several intermittent spikes, and their frequency has clearly increased. At some point it will mean something (just because something has not had meant much so far does not mean it never will).
However, the soaring issuance of leveraged loans really takes the cake. This is a chart to make even hardened bubble-heads dizzy. It is especially noteworthy how the current surge compares to the surge in 2007, shortly before the last bubble peaked. Nothing remotely comparable has ever been seen before. It is a mirror image of record junk bond issuance and the mania for high yielding debt in general (whereby 'high yielding' these days actually means 'not yielding very much').
[6]
Leveraged loan issuance goes bananas – click to enlarge.
So we ask again: Is it a bubble yet? Perhaps Ms. Yellen knows.