High yield / junk bonds are breaking down as corporates find it increasingly expensive to borrow money whether for buybacks which helped fuel the post GFC stock markets rally or simple old fashioned growth, either way its not good news for stocks. The Fed announced last week the start of QT3 (quantitative tightening) history tells us this will not be bullish for stocks i.e. remove liquidity and who will be left to buy risk assets hence as we’ve said repeatedly through 2022 this is a year to sell pops far more than buy dips.
MM believes that tightening liquidity is a major issue for stocks
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