Investors are starting to come to a more realistic outlook about the forward-looking growth prospects, as well as the power of central banks to pump up asset prices.
Tyler Durden reports that:
It seems the warnings from PIMCO's Scott Mather that:
- "We have probably the riskiest credit market that we have ever had" in terms of
- Quality and
- Lack of Liquidity,
- "The current situation compares risk to mid-2000s, just before the global financial crisis,"are being reflected in pricing and flows.
"We see it in
- The build up in corporate leverage,
- The decline in credit quality, and
- Declining underwriting standards
.... all this late-cycle credit behavior we began to see in 2005 and 2006."
One way of visualizing what Mather was referring to is the following chart of corporate debt to GDP which has never been higher. As for the lack of creditor protections, well, just wait until the screams of fury begin after the next wave of bankruptcies.
While stocks have slowly woken up to the realities of the 'recovery', credit-markets have started to flash warnings that all is not well...
With some concerned that summer 2019 is echoing the risk-off deluge from Q4 2018...
And, as Bloomberg reports, traders yanked almost $429 million from State Street Corp.’s SPDR Bloomberg Barclays High Yield Bond ETF on Tuesday, the biggest withdrawal since December.
Mather's rather ominous conclusion:
"I think that’s what you’re seeing now in markets. People are starting to come to a more realistic outlook about the forward-looking growth prospects, as well as the power of central banks to pump up asset prices."
Considering that the S&P is about a few hundred percent higher than where it would be without central banks "pumping up prices", the market is about to go through a lot of pain in the near future if the world's largest bond manager is correct.
[SITE INDEX -- SII - BONDS & CREDIT]
A PUBLIC SOURCED ARTICLE FOR MATASII
SII - BONDS & CREDIT
MATASII RESEARCH ANALYSIS & SYNTHESIS WAS SOURCED FROM:
SOURCE: 05-30-19 - - "Credit Flashes Warning For Stocks As Investor Outflows Soar"
FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
NOTICE Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. MATASII.com does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.