Meeting 10/14/2015



DISCUSSED DURING HAWKTRADE MEETINGS. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.

Hawkinson Applications due October 23 rd

Neil Bloomberg Presentation

Junk Bonds, China Imports, Fed Rate


Sector Updates

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Low Grade


What is a Junk Bond?

A junk bond is a high-risk, high-yield security issued by a company in order to raise capital.

Rated BB/Ba or lower.

Often times used when financing a takeover.

Interest Rates have been at all time lows since 2008

Outcome: Income investors have been chasing higher yields at the expense of riskier bonds.

Junk Bond/Treasury Spread is currently rising, signaling investors see the risk becoming greater than the yield.

Current Junk Bond/Treasury


Fed Raising Interest Rates

As treasury yields rise, there will be less demand for high-interest/high-yield junk bonds.

There is concern that companies will have a hard time refinancing their debt putting them at default risk.

Energy Sector fear of defaulting.

Next Financial Crisis?

Many famous economists theorize junk-bonds will signal the next crash.

As interest rates rise, there will be a run on Junk bonds and too many outflows will signal panic.

Junk bond outflows already have started.

Junk bonds only popular since mid-

1980’s and haven’t experienced rising rates.

20.4% drop in imports from September vs last year

September imports = 145.2 BB

*Reinforces the weak demand from the

World’s 2 nd largest economy*

2 of the 14 federal reserve governors openly stated that they would be against raising rates in 2015 (both were “doves”)

Divergence from Yellen policy of raising rates by the end of 2015


 lack of credibility if rates raised (since some members are split)

Increase anxiety about state of global economy…

AB InBev purchase of SABMiller goes through

$104 billion purchase price

AB InBev will control nearly 30% of the world beer

 supply after expected divestitures

Alibaba to release earnings October 27 th

Stock increased 20% since October 1

Walmart cuts growth outlook

$20 billion plan for stock repurchasing

iShares NASDAQ Healthcare ETF still volatile

EMC accepts Dells price at $67 Billion

Stock still trading down

Apple pay expanding to Starbucks

New facial recognition technology

Apple, Mastercard, PayPal all wanting a piece

GE to Sell Commercial Lending and Leasing

Businesses to Wells Fargo

JP Morgan’s Revenue Slides on Weak

Trading Results

Financials down as earnings season begins