Loading ...LQD & JNK
When I first noticed these patterns I immediately thought to myself, “something is wrong here.” Don’t have time to go into it but
LQD are investment grade bonds and JNK, unsurprisingly, junk bonds. They should not be displaying a very similar pattern IMHO.
This is an alarm bell to me. Moreover, as you can also see, JNK has been able to recover a little since it bottomed but LQD is taking
the 10 Count. That isn’t right either IMHO.
Thank you JL, to add to this anomaly observation…
KKR, Goldman and JP Morgan collectively have a pessimistic 2-3 yr view, with of course Goldman’s being the most optimistic at 32% (moderate) risk of recession.
https://www.zerohedge.com/news/2018-03-15/jpm-everyone-asking-same-question
I glanced through KKR’s report and they have a very high conviction that both equities and bonds are quite overpriced.
http://www.kkr.com/global-perspectives/publications/outlook_for_2018_you_can_get_what_you_need
The whole report is worth reading so I’m not going to post one-off charts but the one KKR long term chart that struck me going back to 1870 – the Stock vs. Bond correlation since 2000 – now THAT is an anomaly – exhibit 118. Note also exhibit 124 which compares REAL Economy prices vs. Asset Prices – with gold price being inflated only slightly higher than US or JPY bonds since 2009. I don’t know the WHEN, but after reading this report the choice between equities and bonds doesn’t really seem like one. More to follow on how Gold performs during periods when both bonds and markets are tanking.