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Will Bank Turmoil Cause The Fed Pivot? | Weekly Round Up

Inflection Point

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The Crazy Rule of Noninvestment Grade Bonds

Bondholders have a contractual claim on cash flow of the business backed in many cases by assets. Equity is a contingent claim, meaning it only has value once all the bondholders are repaid. The state pension fund can't own noninvestment grade bonds, but you own equity, which is junior. "The illogic of that is astounding," he says.

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