[RT] Early Warning Signals - This Indicator Foretold All?

["FXTrader" <fxtrader@xxxxxxxxxxx>]

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>Not sure if anyone caught the article in this mornings WSJ. It was
titled, &#8220;The Early-Warning Signal For Stock Trouble&#8221;. It was quite interesting
to say the least. The article pointed out how the credit-swap market usually
tells you several months ahead of time, when a company is having trouble. The
credit-swap market is basically insurance that lenders, big bondholders,
amongst others, purchase to protect against a borrowers defaulting on bonds,
loans etc. 

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>What was pointed out here was the premium paid for this insurance goes
up dramatically months before the corporate debacle occurs. This happened with
both Enron and WorldCom. The suggestion was made this could be an early
indicator for companies about to have major trouble.

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>The article went on to point out the same premium increases are happening
for Sprint, AT&T, AT&T Wireless, Qwest and yes, you guessed it, AOL
Time Warner.

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>Is this a real indicator or just a fluke? It will be interesting to see
how things play out over the next six months.

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'> 

<font size=2 color=black
face=Arial><span style='font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:
Arial'>Rich C.










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