Commodity prices plunge = No way for US to finance deficit.
Capital controls will be imposed.
US GDP is overstated whereas debt can be accurately measured
Safe asset such as TCK will gain interest.
Capital flow back to Canada
The fall in metal and other commodities is due to slowdown in demand while decline in oil prices is due to supply pressures. I expect oil prices remain weak longer than other commodities since the Saudi's have the wherewithal to cope with lower prices. This is beneficial to Teck as it reduces its production costs and thus increases Teck's bottom line. Investment in infrastructure will continue and grow as long as the human race is alive.
NAV is the midpoint between the highest bid and the lowest offer using the market price on the exchange on which the shares of the Fund are listed for trading.
In other words NAV for this fund can be $80 one day and $20 the next. HYG is way overvalued and I expect a market correction soon. The chart seems to confirm my expectations. Other funds are getting pounded - Third Avenue’s Focused Credit Fund.
In 2011, dividends were .60 cents/month and stock was $90 (8%). Few months ago dividends were .40 cents/month and stock was $90 (5.3%). Now it is .40 cents/month and stock is $80 (6%).
Based on historical data, dividend payout decreases about .10 cents /month over a three year period. As interest rates rise, I expect this value to accelerate. I expect dividend payment to average .25 cents/month by 2018 which equates to about $50/shr at a constant 6% risk premium. Realistically speaking the risk premium for this class of investment in environment of rising rates should be around 8% or $37.5/shr. The market has not seemed to have priced this in at all.