Legendary investor Jeffrey Gundlach was of the opinion that 2016 will be the first very different from previous years - based on AMarkets.
The world will never be the same, if the FED will raise the rate - the expert believes. According to Bloomberg, the markets to price in an 80% probability of raising rates at the upcoming meeting. Already there are projections and with 100% probability. The bottom line - FED is likely to do it because I do not want to shock the markets opposite decision, deceiving the expectations of most.
This year, the stock ETF, which monitors the dynamics of junk bonds, slipped by 6% (including coupons) on average. According to Gundlach, the rate hike against the backdrop of high volatility in bonds with low "grades" - an extremely dangerous move by the regulator.
Schedule - annual dynamics of landfill assets (junk bonds - JNK), traded via the ETF:
Another indicator - an index of loans to corporate borrowers of low quality - dipped markedly in the last few months, which indicates the presence of a real stress on the corporate credit market. Gundlach said low prices for raw materials and oil in particular - is a problem for the US, which can not be ignored. Oil prices below $ 40 - stress for individual companies from the energy sector, the majority of which constitutes a significant amount of companies issuing bonds trash.