Quest for Junk
Gold, Oil, Junk Bonds, S&P 500: all are at price levels that overrun their headlights. What the heck is going on here?
1) Carry Trade
This theory says that cheap $$$ at 0% interest are being borrowed and used to buy assets like a crazed shopper with a new credit card, domestic and international.
2) Printing Money Like Mad
The Fed is flooding the financial markets with dollars galore. All this liquidity is raising all boats.
3) Quest for Junk
This is my favorite. Since fixed securities are yielding virtually zero %, investors are grasping at straws for increased annual returns.
All very well and good, but what next? What is likely to happen next (i.e. raising rates mildly), and how will these investments react?