Although, according to Jenkins, union rules ban credit analysts from being surprised by anything, he was offering his views on potential surprises for 2001. "Surprises are like asteroids," he said. "They are on the radar screens, the question is whether they are going to hit."
This time last year, Jenkins explained, the outlook was far bleaker. Barclays Capital published a research paper called "Forest Fire", recommending government bonds - "not a very good career move if you are a credit analyst," said Jenkins.
Indeed the year was not good. Swap spreads widened as sovereign curves inverted or flattened, and blow-ups like Stagecoach and Xerox hit individual bonds. Including non-rated credits, there were 167 defaults in 2000 totalling some $150bn.
"If you are an analyst," said Jenkins, "you want markets to mirror your personality. You want them to be very boring. You want to come in the morning and say 'I see the Nasdaq did not move last night'. Credit markets do not like surprises."
Of Nasdaq's 25 most volatile days to date, 17 were last year. Debt issuance dropped. Even Fannie Mae and Freddie Mac widened after US Treasury undersecretary Gary Gensler's comments on GSEs.
The prognosis for this year is more reassuring, said Jenkins. Interest rate cuts have steepened yield curves, leading to tighter swap spreads. Issuance is on course for a bumper year. Credit risk from LBOs and MBOs has fallen as the high yield market no longer provides the funding options it did.
"The big surprise is how quickly it has all changed," said Jenkins, suggesting that the credit cycle may have shortened and that quarter to quarter changes are becoming more dramatic.
There are some clouds on the horizon, said Jenkins. One blow-up in the telecoms sector would hit confidence in the entire telecoms sector and hence the market in general. The auto sector is also vulnerable - last time there was a recession in the US, GMAC was downgraded two categories.
Oil prices, the political situation in the Middle East, Argentina and Brazil are all potential sources of trouble. The Nasdaq is still 46% above where it was when Federal Reserve chairman Alan Greenspan spoke of irrational exuberance, and the Dow 40% higher.