It’s interesting that Baa spreads have continued to widen out even as the equity market has rallied in the past few weeks – spreads have moved out 70bps from the April lows, to 307bps. The last time spreads were this wide was back in mid- August when the S&P 500 was bobbing around the 1,000 mark. The S&P 500 is back to where it was on May 18th when Baa spreads were sitting at 260bps. So either corporates are dirt cheap or the equity market has 10% or more downside.
---Rosenberg, 6/21
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