Credit is fine. What's the problem?

JC Parets
February 8, 2023

It starts with credit.

Bottom line.

This isn't crypto where all these shitcoins can go to zero and it won't matter to anyone who matters.

These aren't marijuana stocks that are irrelevant to global asset allocation.

This is the bond market.

This is the biggest and baddest of them all.

We're talking about almost a $120 Trillion asset class.

It's just math: if there is real systemic risk in the equities market, you're going to see it in credit.

There's no way around it.

And so how are credit spreads doing?

As tight as they have been since last summer, and getting tighter:

Why should investors care?

Well, even if you're not trading these bond proxies, there's real information here.

The implications of credit spreads blowing out are going to be felt across asset classes, stocks in particular.

But the fact that high yield credit spreads continue to narrow, is evidence of a lack of risk in the market. In other words, the risk has been not taking on enough risk.

Narrowing spreads is what you normally see when stock prices are rising.

And how are stock prices doing these days?

Lower left to the upper right.

It's been a raging bull market since the middle of last summer. And when did high yield credit spreads hit their widest point?

The middle of last summer.

That's not a coincidence.

We discussed all of this last night on our LIVE Conference Call.

What are the sectors we want to own RIGHT NOW?

Which stocks are we loading up on this month?

How does the sector rotation we've been seeing change our approach to the market?

We went over it all.

Make sure to give it a watch here and download the slides for your own use.

There are some great ideas and we walk through each one.

Don't miss it.

If you don't have access to the Video Call, just email us or give me a buzz here: 323-421-7991 and we'll fix that for you right away.

Let me know what you think!

- JC

 

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