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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (157810)	9/28/2011 6:37:51 PM
From: sammie44	Read Replies (1) \| Respond to of 206326

spreads relative to any reasonable default forecast are out of whack. defaults are likely to stay low because the vast, vast majority of companies who had maturities in 2012-2014 refinanced that paper while the market was hot in 2H09, 2010 and 1Q11. junk spreads are widening mostly due to same reason every other market is dropping....correlation is 1 and its a risk-off world we are in at the moment so there are more sellers than buyers. BBG just printed a "junk" deal last week at 7.625% and NFX printed one this week at 5.75%. spreads are going wider, but with tsy rates so low these are hardly levels that will make CFOs cringe. said a different way, the all-in rate is what matters to borrowers so just looking at spreads without some consideration of where tsy's were at the time doesn't paint the whole picture. virtually every market is "signalling" recession, no reason junk bonds shouldn't also, but there is a lot of value in the asset class vs reasonable default forecasts as there is really few triggers for mass defaults because most of the market has already refi'd front-end maturities.

To: Jacob Snyder who wrote (157810)	9/29/2011 1:56:58 PM
From: Jacob Snyder	3 Recommendations Read Replies (2) \| Respond to of 206326

recession watch: sector performance year-to-date: +19% utilities +12% consumer staples +11% health care +6% consumer discretionary +6% tech -3% energy -5% industrials -11% materials -16% financials stockcharts.com[SECT] Defensive sectors have outperformed all year. This is what happens at the end of a bull market, and early bear market. Financials, currently doing the worst, should outperform at the end of a bear market. Consumer Discretionary/Staples 5Y ratio, stock performance: After troughing in late 2008, Consumer Discretionary outperformed, until early 2010. Since then, it put in a triple top, and then headed down in 2011. Consumer Staples outperform at the end of a bull market, and into the following bear market.