The Credit Recoupling

The graph below shows the stock market (in blue, by way of the SPY) and the junk bond market (by way of JNK, although you just as easily look at SJNK, HYG, EMB, or a variety of other debt-sensitive instruments). My view is that credit will lead the way (lower) and that, sooner or later, the gravitational bull of the bonder market is going to bring equities down to levels that many people find unexpected.

(Click on image to enlarge)

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