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‘Bubble Music Is Playing’ In Financial Engineering
There's been no shortage of digital ink spilled in these pages about what central banks hath wrought in terms of the incentive for corporates to borrow to fund buybacks.
With policymakers driving everyone down the quality ladder in search of yield, investors clamor for corporate debt. And where there's insatiable demand, there will be someone who's more than happy to meet it with supply. Of course the temptation is to use the proceeds from record issuance to fund share repurchases and that crea
We are definitely in bubble territory and the data you provide supports gut instinct and dead reckoning. Here’s an interesting thing: pull up the chart of the CBOE since November 6th. I could get into a lengthy conversation about what it means, but the bottom line is that chart trajectory is absolutely unsustainable and could be there precisely due to financial engineering. Not sure what that annualized Sharpe ratio would be, but this is not normal.