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Jeff Gundlach Is ‘Amazed’ At How ‘Copacetic’ Markets Are About Coming Credit Apocalypse
Markets are intently focused on the possibility that investment grade credit is set to usher in the next crisis, and you know what that means, right?
That means it's time for Jeff Gundlach to repeat what everybody else has been saying for months and pretend like it has more meaning now that he's said it.
As a reminder, this is Gundlach's modus operandi. He listens to what everybody is talking about and then he shows up on CNBC or grants an interview with any mainstream financial news outlet th
i cant help but notice the increase in spreads in 2015 on the chart above. i remember a guy who said these spreads are never like this outside a banking crisis…and since the news didnt talk about any banking crisis, market prices must be wrong.
what exactly was occurring during that run in spreads and what pushed it back down? taper tantrum was 2013. and then rates fell to 2016 lows. i dont know the ecb’s history as well, the dates of its musings, deadlines, ltro’s, corp bond buying. but generally a massive round of QE on the part of the swiss, ecb, japan, that continued and peaked at an annual rate of growth in 2017 was occurring. an unruly market was met with some $2T+ of liquidity.
so as the mkt started to see a reality of 1.9% max gdp, a strong dollar with declining EPS, and began to price in, historically ‘normal’ conditions (where some firms actually fail). but QE was still the fashion and draghi did whatever it took to buy us 3 more years of magical thinking.
today QE is out. tightening financial conditions, in credit based economies, always result in recessions and often bear markets, some better some worse. we also have a generation of mkt professions who believe -33% is unthinkable, far to extreme, and preventable.
Ferengi quote, “There is profit in war, there is profit in peace, who cares?