Re: [RT] Bad news in corporate bonds just keeps getting worse

["Bill DuBroff" <wd78@xxxxxxxxxxxx>]

FWIW, there is a fellow on LWSide1 (eGroups) who 
says that historically corporate and treasury diverge for quite a while prior to 
a recession, and then come together again.  Using this model, he says that 
the divergence has just about run long enough to "guarantee" a 
recession.
 
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  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  J W 
  To: <A title=realtraders@xxxxxxxxxxx 
  href="mailto:realtraders@xxxxxxxxxxx";>realtraders@xxxxxxxxxxx 
  Sent: Tuesday, October 31, 2000 2:08 
  AM
  Subject: [RT] Bad news in corporate bonds 
  just keeps getting worse
  Is the corporate bond market really as bad as Cramer makes 
  them sound in this column?  Any more detailed 
  information?JW----------------------------The Ties That 
  BondBy James J. Cramer 10/30/00 7:28 PM ET  The only 
  fixed income guy I know who isn't worried about his job next year is Jon 
  Corzine. And that's because he managed to escape the bond market, where he 
  toiled for years at his old firm, Goldman Sachs, and wound up against an 
  easy U.S. Senate challenger in his home state of New Jersey. If 
  you live and breathe equities, you may not know that the underpinnings of 
  all finance revolve around the debt markets, not equities. Further, you 
  may not know about the pounding going on in the bond business. The 
  issuing and trading of corporates and Treasuries used to be giant 
  businesses responsible for a massive amount of the profits at the big 
  brokerage houses. Now it is assets under management, underwritings and 
  proprietary trading that make the profits. The bondie folks aren't 
  carrying their weight any more. In some firms, where they used to be 
  responsible for black ink, they are now responsible for black holes. But 
  to corporate America, particularly growth corporate America, fixed income 
  matters aplenty. The nation's phone networks have been built with bonds, 
  not stocks, and the freeze in bonds -- they simply aren't trading -- has 
  been a nightmare for the phone company buildouts. As the year 
  winds down, the bad news in corporate bonds just keeps getting worse. The 
  market, far from coming back, continues to deteriorate. No volume. Lots of 
  pending defaults. Lots of bad paper out there. Lots of mutual fund 
  redemptions. The bond bleeding spurts, with no tourniquets in sight. And 
  the layoffs in that end of the business threaten to be monumental, 
  especially given the merger of so many big brokerages. Most people 
  who just got into this stock market in the last few years have no idea how 
  important the bond market is. They just don't know that if the bond market 
  doesn't improve, the telco equipment market just won't come back. In fact, 
  if you asked me what the single biggest impediment to Cisco (CSCO:Nasdaq - 
  news - boards) making its numbers next year, it's the bond market. If we 
  don't get some spark that allows growth companies to borrow, Cisco will 
  have problems making its numbers one day. That's what the stock 
  market is saying. It is finally beginning to listen to the bond market. It 
  doesn't like what it hears. -------------------------James J. 
  Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time 
  of publication, his fund was long Cisco.To 
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