as all the pieces are now in place. Macro conditions and the various pieces to the puzzle have now come together to suggest if the high yield market is going to come to the fore and be the performer it is intended to be now is the time.

Why? Because now the stock market is coming under increased scrutiny from a valuation standpoint where some sort of consolidation, distribution etc. is likely to happen. Whereas, we are seeing some cracks in the government bond market's veneer as represented by the poor reception to the 30 year bond offering last week where the FED has no choice but to put up or shut up in order to keep rates low enough for mortgage mitigation... otherwise the residental real estate market will continue to deteriorate under the weight of the higher unemployment expected in the months ahead.

Another significant development is that as a result of the stress test banks are coming to market to return tarp funds, shore up balance sheets and meet the capital requirements. This is significantly dilutive and represents a peaking of valuation for the banks as a whole.
So... where's the money going to go?

Conclusion: investors looking for high real returns will gravitate to the high yield bond market, borrowing short and buying longer term high yield a sort of asset allocation carry trade. All the pieces are now in place where separation from the equity markets is now important to see. I would say that over the next couple of months we could see for the high yield market a similar appreciation that has occurred in the equity markets. The equity markets got a head start but now are hitting a valuation wall... the high yield market has some catch up to do!!!