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Kolanovic, JPMorgan Stress ‘Ongoing Market Risks’
"For lack of better words, our outlook is negative," JPMorgan's Marko Kolanovic told a conference in Frankfurt last week.
Kolanovic, an erstwhile bull, joined the ranks of Wall Street's more cautious strategists late last year, as central bank tightening proceeded apace and geopolitical headwinds refused to abate.
He's been more or less adamant about the scope for additional risk-asset stress since then. Last week, he was especially pointed, describing Fed policy as "likely already past the po
The real irony of current trends is that people are emptying their bank accounts to put their money in money market funds, which any banker will tell you are not protected by anyone or anything. And since the Treasury debt ceiling has not been raised, it is possible the first securities the Treasury will put in default will be the short term credits found in all money market funds. Sadly, stupid is a growing problem it seems.
My feeling, without any rigor supporting it, is that the real crisis will come from leverage away from regulated banks.
Shadow banking is my guess.
https://www.bloomberg.com/news/articles/2023-03-27/banking-crisis-raises-concerns-about-hidden-leverage-in-the-system?
https://www.bloomberg.com/news/articles/2023-03-29/jpmorgan-goldman-plan-to-start-trading-private-credit-loans
Private debt is a shadow banking area overdue for a mark-to-market paroxym.