INTEREST RATES SOAR TO 8.3% ON CORPORATE BONDS - Credit Investors Bolt Party as Economy Fears Trump Low Rates. Debt investors are a nervous lot these days, and new signs that global turmoil is weighing on the U.S. economic outlook are only adding to their angst. Measures of corporate credit risk spiked immediately after a Labor Department report showed that payrolls rose less than projected last month, wages stagnated and the jobless rate was unchanged. Investors are now demanding more than they have in three years to own junk bonds, which are on track to cap off their worst week this year. Frustration is growing that even after seven years of easy-money policies, economic growth remains sluggish. While the Federal Reserve is signaling that it’s in no hurry to normalize interest rates, investors are increasingly worried about what the data will mean for earnings at companies that have sold $9.3 trillion of corporate bonds since the start of 2009.
Average borrowing costs for junk-rated companies have surged by 0.4 percentage point this week, to 8.3 percent, Bank of America Merrill Lynch Index data show... There is a RISK OF UP TO 100% LOSS on all stocks and every single stock prospectus out there clearly tells you exactly that. Anyone who has any funds in stocks who can't afford to lose it all has no business having any funds in stocks. The party on Wall Street is just about over - The rise in stocks that began in March 2009 is one of the longest stretches without a bear market in quite a few years. Not only that, but October was the best month for stocks in four years. As you might have expected, this has driven the market’s price-earnings ratio well above average. The current ratio for the Standard & Poor’s 500 stocks is a tad over 22; the average P/E ratio for these stocks since the 1870s is 16.6. Investors should enjoy the good times while they are still around, for there are increasing signs that the party may soon be over.
No comments:
Post a Comment