Wednesday, April 7, 2010

Signs of the Apocalypse?

The economy appears to be rebounding from a very nasty recession which was induced by a credit crisis. Unfortunately, a lot of people don’t seem to have learned their lesson and they are behaving like 16 year olds again. Otherwise, what else should we make of these developments?

  • The Wall Street Journal reports that covenant-lite loans are making a comeback.
  • Junk bonds resurgent: Companies sold $54.3 billion in U.S. high-yield debt during the first quarter of the year, according to Dealogic, up from $9.6 billion a year ago.
  • Bloomberg reports that the house flipper is back, or vulture investors looking to buy and flip distressed properties.
  • Mebane Faber highlighted last week that Schwab is advertising its low margin rates.
  • The new Age of Frugality is history. (Well, that lasted a long time.)
  • From FT Alphaville: “displaced credit experts” have shifted their focus away from CDOs and other structured products to emerging markets in South America and Asia.

Meanwhile, the Fed is keeping its eye out for speculative bubbles so that they don't get out of hand. (I am glad they are so vigilant.)

Is it time to put on the risk trade or are these Signs of the Apocalypse?

1 comment:

Unknown said...

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