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Market Notes

Corporate Debt Red Flag

August 16, 2014

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Over the last month Junk bonds have begun to underperform Treasuries:

http://finance.yahoo.com/q/bc?s=HYG&t=1m&l=on&z=l&q=l&c=ief

Many corporations have been abusing their balance sheets in recent years, and will soon have to rollover a mountain of accumulated debt:

http://www.zerohedge.com/news/2014-07-28/chart-has-high-yield-investors-running-hills

This is the Achilles Heel of our current economic paradigm. Diminishing returns on ever more marginal debt:

http://www.oftwominds.com/blogjuly14/marginal7-14.html

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