It is very evident that money is once again flowing into junk debt. I am finding every piece of junk debt securities being bidded up over the past week. Amazing what happens when the Federal Reserve talks about not wanting to ease up on quantitative easing – liquidity and party-time again for everybody! Back to the strategy of borrowing at 1%, and buy up those 8% junk debt securities and skim the spread… until the music stops.
Of course, I do not endorse or condemn this strategy – it will work, until it stops working. Such are the markets we are currently in.