Kaminsky's Call: Investors Send Message of Extreme Conservatism

Corporate bond sales are surging and the world's biggest computer-services company is at the wave's center.


's sale of $1.5 billion of three-year notes sent ripples through investors' circles. On the heels of a record-setting July where yields on debt fell to the lowest level in four years, IBM issued and sold their bonds with a shockingly low 1 percent coupon.

Three thoughts on the messages being sent by the bond market here:

  1. A secular change has taken place. When this much money goes into bonds, expect the cash to stay there for a very long time. Money on the sidelines is going to work in very conservative fashion.
  2. Many bond investors are not remotely interested in price-shopping the stock. IBM's dividend yield is 2 percent, yet it's the corporate bonds with record-low yields that were gobbled up. This signals severe lack of confidence in the stock.
  3. Corporations are attempting to be more capital-efficient, leveraging their balance sheets. Perhaps this could lead to expansion down the road (a positive), but for now, IBM and others are shelling out low-coupon paper.

My "Call-to-Action" today is to forget arguments over deflation, inflation, and double-dips and read the tea leaves. By pushing yields to these levels, buyers are sending a message of extreme conservatism.

A relative melt-up is still possible, but the bond markets are talking, and they deserve to be heard.

Related Links:

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.

All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.

Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.