About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, September 28, 2008

Stock & Corporate Bond Markets

I am headed out later today for a family birthday celebration and
will miss the release of the provisional bailout plan targeted to
circulate before the markets open in Asia this evening. I note only
that the original two and a half page Paulson version has
mushroomed to over one hundred pages (devil in the details).

The stock market is but mildly oversold in the short run, but
6 -13 week measures show we are moving toward a tradable
oversold. I would prefer another down week to produce a
more formidable set-up, but one has to allow that the plan
to remove known toxic debt from the private system might
serve as a short term palliative to a bruised market. As you
might imagine, the suspension of shorting of financials now
ongoing could temper any bounce we may see.

The corporate bond market took a major hit last week with
yields on many issues jumping by 100 basis points or more.
So we have a handsome short term oversold condition here.
The Bloomberg junk bond index closed out Fri. 9/26 at
15.02%. It helps you understand why junk bonds have that
appellation, but it is also a signal to savvy credit analysts that
one can, if one chooses wisely, earn out one's capital in nearly
5 years via the issuer's own cash.

The next 24 hours should be interesting enough....

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