BRIEFS

There's been much talk so far this year about bonds, starting with all the babble abuot a so-called "great rotation."

Now Pimco's Bill Gross, the noted bond guru, some are saying made it offical recently when he pronounced bonds DOA.

Gross specifically mentioned the 30-year bond bull market that started in the early 1980s, actually the same time the stock market took off. 

But as we wrote about recently the real tipping point came in junk bonds now offering below 5% yields on average for the first time in  the history of these securities.

There are two thing to consider here, risk premium and yield. Yields may be at historic lows for junk, but risk premiums are not. And that tells an important tale.

What all the central bank easing going on around the globe should tell you is the old for-every-action-there-is-a-reaction.  Similar to what the administration is trying to do with its chain CPI index--screw the COLA folks--cutting interest rates to revive economies is putting the screws to all and any looking for yield.

And that goes way beyond just the COLA crowd.

But its a two-way fare. One fine day these yields will prove less attractive than a three-day old hotdog sitting in the fridge.
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