There is an ongoing debate about the current state of the junk bond market and what it means for equities and, more broadly, the economy. Spreads on the junkiest of junk bonds have recently moved to their widest levels of this expansion. The NY Times aptly reflects the consensus view that there has really been no, “rout,”…
The pork cycle is to economics what the law of gravity is to physics. You can count on it. Every single time. The only thing that makes economics the trickier science, is timing. Because you never know when the market hits peak or bottom. But economics is not an exact science. Investors don’t need to…
It’s been a tough year for closed-end fund (CEF) investors as risk asset volatility, a slump in credit, and general unease over the Federal Reserve’s long anticipated rate increase has widened discounts. However, many CEFs are still awarding investors with large end-of-year special distributions. In a CEF wrapper, a fund is forced to distribute any underlying portfolio earnings above…
I was on record stating a belief the Fed would effectively hike by 1/8 point. I had that belief because that is what the Fed Fund Futures implied. Regardless, I was wrong. If someone is going to prove you wrong it may as well be yourself. Here is a table of Effective Fed Funds Rates straight from…
While consumers are hailing the fall in oil prices, companies that supply these oil companies with industrial infrastructure equipment are beginning to feel the pain. The overall rig count in the U.S. has been declining over the past few months due to OPEC continuing to produce about 31.5 million barrels a day. This has put…
“The current bubbles in junk bonds and foreign debt are not in any way driving the economy. Presumably we are seeing somewhat more investment as a result of the fact that uncreditworthy companies were able to borrow at a low cost, but there is no notable boom in such investment. Similarly, if foreign borrowers have…
Dow Jones Industrial Average chart… Look for yourself.
On options expiration days, the market tends to move to strikes with high open interest, and to close there. That’s because the options have maximum gamma around the strike and the hedging is furious. Last night virtually all the in-the-money calls on SPY were exercised, because it went ex-dividend. Note that SPY is the largest…
The Federal Reserve has followed through on their assertions to raise the federal funds rate off the zero bound. It’s been all everyone has talked about for awhile now so I don’t think there is anymore to say at this point. Now the focus shifts to the markets reaction going forward. After a 13% rally…
The USD has held up relatively well so far this month. Remember December is one of the worst months for the dollar from a seasonality perspective so the fact that the FXCM USDollar Index (basked of USD versus EUR, JPY, GBP and AUD) is pretty much unchanged this far into month is probably a good sign. Obviously, there is a…
