The Pin-Prick for 2015


What Blows Up First? Part 5: Shale Oil Junk Bonds

John Rubino on November 18, 2014

One of the surest signs that a bubble is about to burst is junk bonds behaving like respectable paper. … This pretty much sums up today’s fixed income world. …

Most of the following charts are from a long, very well-done cautionary article by Nottingham Advisors’ Lawrence Whistler:

The supply of junk bonds is way higher than before the previous two market crashes:

Junk issuance 2014

The issuance of covenant-light loans — the crappiest kind of junk — is rising. …

Here’s what happened to the various classes of debt the last time things got this out of whack (junk is purple):

Junk returns historical

As for what might cause the junk market to crack, one prime candidate is the (shale) oil industry.

What Blows Up First? Part 5: Shale Oil Junk Bonds

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Biding my time in central ms ... yours too, if ur reading this.
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