It’s No Mystery Why Preferred Stocks Might Fall

The preferred stock market has been riding high on the insatiable chase for yield by global investors. They appear tightly buttoned and quite stable on most trading days. But it’s true identity should not be forgotten, as it remains a close brother to the high yield bond market. More dignified and less dazzling than its headline grabbing and sometimes flawed counterpart, the preferred stock market is still wired in many of the same ways. And with the high yield bond market coping with a toxic mix of already tight credit spreads, rising default rates and plunging oil prices, preferred stock investors should not expect to go unaffected if the high yield bond market takes a sudden fall.

Please click on the link to read more of my article on Seeking Alpha.

High Yield Bonds: Cracks In The Facade

The high yield corporate bond market has shown tremendous resilience over the last several months. After plunging sharply along with oil prices through the early part of this year, the high yield bond market rallied just as swiftly once oil prices bounced from their lows. But despite the fact that it is just days removed from all-time highs according to selected measures, notable cracks are growing in the high yield bond market facade that may suggest another challenging stretch over the remainder of 2016.

Please click on the link to read more of my article on Seeking Alpha.

Time To Let Go Of Your Junk

Investors have been feasting in the post crisis period on a banquet of free flowing liquidity and low cost debt. But as the monetary spigots are being gradually shut off, some of the higher risk areas of capital markets have started to show some worrisome cracks. While it certainly has been a jubilant time for risk taking in capital markets during the post crisis period, now may be the time to meaningfully dial down exposures to some of the higher risk areas of the market while the opportunity still presents itself.

Please click on the link to read more of my article on Seeking Alpha.

High-Yield Bonds: Truce

The high yield corporate bond market has performed phenomenally well over the past few months. After having broken sharply lower for months, high-yield bonds bottomed in February and have been rallying furiously higher ever since. What’s perhaps most notable is that despite this rally, corporate credit quality has deteriorated further and bankruptcies have surged over this same time period. Perhaps this high-yield rally is signaling that the worst will soon be over for the asset class. Or then again, maybe it has been nothing more than a truce for the embattled category in an ongoing war that remains long from over.

Please click on the link to read more of my article on Seeking Alpha.

Stocks Versus Bonds: Who Will Win In The End?

A divergent war of returns has broken out between two similar asset classes. On one side are emerging market stocks, which have been careening lower for nearly two years now. On the other side are emerging market bonds, which have been holding steady if not pushing higher over this same time period. Such a wide divergence between these two asset classes is uncommon over long-term periods of time, as the forces driving the performance of emerging market stocks are often similar to those impacting the health of emerging market sovereigns and the ability to service their debts. So who among the two categories will win in the end?

Please click on the link to read more of my article on Seeking Alpha.

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