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Neon Swans, Cash And A Dubious Anniversary
The question is no longer "How long until something breaks?" Something broke this week. It was the UK bond market, and it nearly resulted in a mini-Lehman moment across the UK pension complex.
The question now, rather, is "How long before the crescendoing panic is too loud for the Fed to ignore?"
Although US officials are, for now, sticking to the hawkish script, the Bank of England's intervention and repeated pushback from the PBoC against the record-weak yuan, suggest a growing sense of angs
But if one way or another, at some point the Fed comes in and saves the day (and postpones the issue), why not invest in mortgage backed securities preferreds for instance, which are basically quite safe unless the mortgage market falls apart in a way we’ve never seen before…? Sure, it could go lower, but the yield is great, and I don’t have to time the market..
I am surprised that German BUNDs are still yielding only 2.0% to 2.2%. Russia probably still has lots of tricks (e.g. blow up or cyber-attack LNG terminals in 2023+, extend the war, cause a bigger refugee crisis, assassinate EU leaders).
I think the Russian people have just about had enough Putin. I don’t think they want to go to war with the rest of the world at all.
Believe that the required “monster credit event” may be over in the private equity and private lending sectors. There’s plenty of leverage there and the exit liquidity is far from abundant.
@derek, would a PE/PD credit event tend to be slow developing given their ability to mark to model?
Right you are. Hearing that few valuations on June 30 reports were lowered. Perhaps they are hoping for a righteous rebound in the economy and markets to bail them out? Otherwise. They’ll eventually have to ‘fess up. Sometimes due to lowered prices on follow-on offerings.
Prestwick- not sure. There were some recent stories on a hanging bridge loan getting written down but I don’t know how exposed banks are to PE. The private credit groups are likely to be larger borrowers, no?
Perhaps our Dear Leader can rustle up some perspective from someone more immersed in that world than I am.
Derek, are the big banks exposed enough to that world, such that systemic breakdown becomes a real possibility?
I don’t know much about the magnitude of the problem that you cite. I’m sure it’s an issue for someone, but large enough to crash the Too Big To Fail ‘s ? If not, then Fed might not care (?)
Banks always seem to find ways to lose money lending into thesev kind of markets.