Removing Neumann is a difficult decision for Son, who has long believed in WeWork and Neumann's vision to quickly expand the company.Technologyread more
The Kingdom and oil and gas industry have been slow to shore up defenses, raising red flags about the possibility of longer term fall-out in the region.Technologyread more
Datadog went public on Thursday and instantly hit a $10 billion valuation, becoming the fourth cloud software debut to reach that level this year.Technologyread more
There are challenges with Iran, North Korea, the Afghan Taliban, Israel and the Palestinians — not to mention a number of trade pacts.Politicsread more
Blackstone Executive Vice Chairman Tony James says he's less optimistic now than before that the U.S.-China trade war could be resolved, but even a smaller deal could help...World Economyread more
In his new memoir, "The Ride of a Lifetime," Iger explains why he decided against the deal to buy Twitter.Technologyread more
In perhaps Buffett's first televised profile, he explained a method of investing that prioritizes bargains and makes use of an occasional baseball analogy.Marketsread more
Gluskin Sheff's David Rosenberg reinforces his recession forecast following the Federal Reserve's September meeting.Futures Nowread more
"This would be the most profound violation of the presidential oath of office certainly during this presidency," House Intelligence Chair Adam Schiff said.Politicsread more
A 58% majority of registered voters express unease about voting for Trump, but slightly more say the same about Joe Biden and Bernie Sanders, while Elizabeth Warren fares only...Politicsread more
The massive market transformation this month that some on Wall Street called a "once in a decade opportunity" might have just been a one-off technical move because of taxes.Marketsread more
High-yield exchange-traded funds have become a hot story in the last few days, with many market participants wondering what the effect might mean on the broader market.
To get right to the point, here's the correlation between the overall stock market and high-yield bonds. To be specific, this is a chart of the rolling three-month correlation between the and the Barclays U.S. Corporate High Yield Bond Index.
As you can see, over the past five years, the correlation has almost always been positive. Even though they are still technically "bonds," junk bonds reflect a higher-risk portion of the spectrum, and hence trade more similarly to stocks. These certainly aren't as safe as government Treasury bonds — and they definitely don't trade like them.
The average correlation over this entire time period is around 35 percent. But we've seen it swing widely, from a high of 68 percent to a low of negative 22 percent. Right now, we are experiencing correlations in the 40s — so just slightly higher than usual.
While there exists a chance this could spread, what we are more likely witnessing in the high-yield market is a natural, albeit dramatic, resetting that could end up realigning things in a healthy way down the road.
For now, the high-yield problems haven't come to affect broader equities in a meaningful way.