Re: SMALLS, JUNK and (smarty-pants guru) Albert Edwards
[The “Coverage Ratio” is an old fundamental analysis measure that looks essentially at “How many times over could you pay/cover your current interest payments with your current earnings”].
https://www.investopedia.com/terms/i/in ... =0&o=40186
Edwards and his colleagues find weakening coverage,
ESPECIALLY FOR SMALL CAPS, and it’s a cause for worry. "...interest coverage for the smallest 50% of US companies is
near record lows , at a time when interest costs are extremely depressed and when profits are at peak."
"…investors are beginning to punish the corporate debt and equity of highly indebted US companies. We have highlighted consistently that excess US corporate debt is probably the key area of vulnerability that could bring down the QE inflated pyramid scheme that the central banks have created." And he opines that this is an early signal that “the party is over”.
But that’s fundamental analysis; let’s get back to technicals…
Technically, that’s what HYG is telling us too.
http://www.zerohedge.com/news/2017-11-1 ... -justified