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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (16391)11/20/2004 11:35:33 AM
From: mishedlo  Read Replies (1) | Respond to of 116555
 
It may be a multiple step process. The flow of money into junk stalls, spreads slowly widen and no one will think anything of it if we get back to levels of a few months ago. The stock market dips and dip buyers come in but the dip does not hold. Junk bonds get a little nervous and there is a steep widening.

IMO that PIMCO rolled out of Junk is telling. It remains to be seen if others follow. No one will ring a bell and there has been at least one other headfake down.

In the binary US world those selling equities yesterday probably rolled into bonds. One day does not prove much. Perhaps 1 more hike is what it takes. It took 5 in the UK to produce results. Why not here?

Mish



To: Crimson Ghost who wrote (16391)11/21/2004 5:38:08 PM
From: FiveFour  Respond to of 116555
 
The junk spreads normally shrink at the early stages of a growth cycle. Spreads will increase when the credit risk in holding this debt starts to increase in these companies, that is, when the economic slowdown is obvious to all.


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