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Time for Investors to Leave Bonds for Stocks?

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  • Description

    Interactive Data CEO Mason Slaine on the outlook for the bond market.

  • Duration 4:34
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-- David look at today is obviously a significant day for equities a little more significant early in the day when we -- -- just within spitting distance of hitting the all time closing high for the Dow right now we're up about 21 points.

The credit markets could be a key indicator for stocks and where they might go next let's period yeah.

Face -- -- he determines market pricing of fixed income assets.

They priced three.

Million bonds all around the world everything from Munis to of course corporates he's the chairman and CEO inter active data and what is the message.

The corporate bonds are telling us right now.

Corporate bonds are priced with the lower shields they've been -- -- since the 1950s.

And high yield bonds in particular -- trading at the lowest yields they've ever been.

And the amount of issuance is -- a record high.

What does that have English please for our viewers of what it tramps like that for -- for what banks to equities to Jadox.

That -- yields you get.

On all kinds of bonds even from high yield bonds which have a high risk profile.

-- very low relative to equities and of course so -- Erica that was the time what the net.

Well -- -- -- always 20/20 but going forward I think that.

A fixed income rates and are very near the bottom of where there at the Kevin -- credit does that that signal flashing red flag for equities.

Yes it does and there's been flashing red lights for a long time the fact that Bernanke feels compelled.

To buy 85 billion dollars worth of bonds -- -- month.

Tell you that he's very worried about the economy and that people that -- watching the economy.

A concern which is ultimately gonna have an impact on things like corporate earnings and ultimately stock prices -- muscle.

Things like JFK which is Barkley is high yields ETF and then we've also got -- -- -- which she is -- you know that also gives you the same situation a picture.

IShares high -- and and you see.

How they started to look very healthy over the past couple of years and then.

He's seeing little moved to the downside that I'm just wondering if for awhile there you've got nervous but now -- it's -- kind of something where people might say what do you avoided what you go -- -- how do you use corporate bonds in the fixed income market.

I think high yield bonds are really priced for perfection to assume there's no real bad economy coming no real increase in yields.

And tell -- to happen or -- people gonna lose money and high yield bonds because have no place to go but up in terms the yields and done in terms of price.

And do you look at treasuries in the same fashion -- -- we've got a ten year yields that's at about one point 89% that to me looks a little suspicious to now.

The difference between treasuries and high yield is -- the economy turns bad.

High yield bonds get in trouble because they're the credits are not good government does the government what does a sign -- -- have to see for the bond market to a what are you looking for for yields to improve.

You have to see better economy.

If for yields to the Dow and the treasury prices up -- -- a recession what's your best guess which side -- I think we're going nowhere I think we're going to have in terms of ten year bonds treasurys still be a reason he won't point eight and two point 1% when your friends tell -- I mean treasuries because that's safe and -- guaranteed a return to shake your head a little -- You are guaranteed that when they mature you'll get a hundred cents of the dollar in the meantime you might get one or 2% yield.

We have whales might be getting five so -- the equity markets still a better thing especially on a day or were about to hit five year highs it is if you can deal with the risk and volatility of the equity markets.

You know we've got a situation where the US government is suing her standard and -- well.

The parent company Standard and Poor's McGraw-Hill with that affect people who all think -- -- goes back to the financial crisis and how they.

Miss priced helping -- -- certain financial instruments stirred at leading up to the financial crisis but whatever happens there does it affect.

Up bond holder in any way shape or form out there.

If if the worst case happened.

And the government effectively put stated pours out of business.

He would make it very hard to determine the rating of the credit of the credit rating of bonds that would create the liquidity of the market.

On the go eleven happened what's your best guess on equities and we soon have -- your higher -- we retreat.

We definitely stay -- we possible little higher.

Because there's no reason is no alternative.

And -- create a sudden bad bump in the economy which is not the that the data was seeing now I think equities are okay in the short term.

Mason.

I don't know what to think of what -- told me she can't it's it's one side or the other of a little confused will be watching everything -- as it develops thank you very much basis -- -- Interactive Data chairman and CEO.

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