Larry McDonald (@convertbond), Matt Davio (@misstrade), Sovereign Bonds, & Trading for the Masses

Been watching this video of Larry McDonald and Matt Davio, and there are a couple of take-aways:

  • Greek debt has blown out, and won’t come back in.
  • The thirst for yield continues as the Fed/central banks show no signs of pulling back on liquidity. Junk yields are way low, given the credit risk inherent in holding them (in my view).
  • The risk transferrence from corporate/personal balance sheets to sovereign balance sheets is an unintended consequence of the excessive liquidity in place (the definition of “falling on the grenade”)
  • Back to Greece: the sovereign debt issue is at the precipice of a currency issue. Brussels, Berlin, and Frankfurt will go toe-to-toe with Athens about this before it’s all said and done.

At any rate, take a few minutes to watch this.

Larry McDonald @convertbond and Matt Davio @misstrade talk Sovereign Bonds vs Corporate Bonds « Trading for the Masses 888-201-4201.

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Filed under finance, government, macro, Markets, You're kidding

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