FBO newcomers, JNK is the junk bond (AKA high yield) fund. It is aptly named because it invests in bonds which were issued by companies which were not financially sound enough to receive investment grade ratings. In other words, high yield because of the high risk.
Historically, junk bonds are the fodder of gamblers, not real investment institutions. But with treasuries yielding nearly nothing at a time when pensions and insurance annuities contractually owe their participants 8% or more each year, every year, forever, where else was an insolvent pension fund or insurance company to turn? They cannot meet their financial obligations and so they started getting into more and more risky "investments" in order to buy the fund manager a little more time of collecting a fat paycheck for what will eventually be understood to have been running a Ponzi scheme. It's good work if you can find it. Good, until that is, the fund collapses and all the idiots who lose their life savings in the scam come-a-gunning for you.
When there is high demand for junk debt, the price of JNK rises while the underlying interest rates of the debt fall. During these liberal "risk on" times, junk bond prices soar as their interest rates fall almost down to the level of sovereign debt. A widening yield gap (AKA "spread") between junk debt and "safe" debt (none of it is really safe in a debt Ponzi) tells us that junk debt is being sold off for some reason (a growing risk aversion) and that to attract buyers this debt will have to yield higher.
The price of the JNK ETF falls as junk debt yields rise. Thus, JNK is a good indicator of the risk mentality of the herd. Trust me when I tell you that this will soon be in free fall. How do I know? Simply because this is a debt Ponzi and no Ponzi ever lasted forever. Given the circumstances one cannot blame Yellen for nearly vomiting during her recent speech. This kind of growing risk has got to be sounding alarm bells all over the place and at this point the fed can't really do anything without again increasing the already stretched wealth gap.
There is no more political will for bailouts. Whereas liberals back it 2008 said "OMG, it will all collapse and we will have martial law?? DO ANYTHING! GIVE THEM ANYTHING! SSAAAAAAVEEE US! But conservatives are rapidly taking over, just as I indicated would become the case when the trigger event occurred in which the Ducks kicked A+E's liberal ass. A more recent and major, major proof point was the recent ousting of the crybaby of congress John Boehner. The reason given for his ousting was made very clear by Boehner himself: the conservatives forced him out. I cannot say I am shocked and in fact there is much, much more to come. Major liberal names are going down in the coming collapse. All the signs are there for those with the eyes to see.
When conservatives are presented with the same "pay up or the banks will collapse and there will be martial law" threat that liberals caved in to back in 2008, conservatives will just say that the banks deserve to be wiped out and if someone wants to force martial law upon the populace in order to drive fear to compliance action, then bring it. We don't want it but we won't put up with it and, by any means necessary, we will prevail. This is not a threat, it's just what conservative Americans are thinking and saying and, dear liberals, preparing for. So if that's the way the liberal establishment wants it, then civil war it is. If you try to call in the military on us I predict that it will fracture. You think you have problems now??? Your problems are nothing. You want problems, be stupid enough to fracture the US military. What a nightmare that could turn out to be.
I am hopeful that the conservative wave will affect and push right even the most ridiculous of leftist liberals before we get to the point of armed resistance but if someone tries to cram another elitist agenda down our throats, there will be massive blowback and in that event I believe there will be widespread fighting of the lethal variety.
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