Below please find AEGIS High Yield Fund's Q1 2011 letter. It is interesting to read through some of the distressed and high yield guys letters as they are usually a quarter ahead of the rest. It is somewhat telling that they spend a good amount of time discussing inflation. I recently read an interview with John Burbank of Passport Capital discussing why he sold some gold and he warns of the deflationary effects associated with the removal of QE2. AEGIS spends a good amount of time discussing inflation and the potential of QE3 and the results of lax fiscal policy.
I personally think fiscal austerity cannot be achieved - there are just to many short-sighted selfish parties involved.
Ahyfx q12011 Letter