Submitted by QTR's Fringe Finance
Friday’s selloff was not a surprise.
Between deteriorating credit markets, rising Treasury yields, increasingly absurd artificial intelligence valuations, enormous amounts of leverage and an entire financial system that has spent the better part of two decades mainlining cheap money like a frat guy guzzling Jaegermeister at the bottom of an ice luge, the warning signs have been flashing for quite some time.
The only real surprise, at least to me, is that it’s taken this long for equity investors to begin paying attention. And what worries me most isn’t how far stocks could fall, but how spectacularly unprepared investors are to deal with a market that actually goes down and stays down.
I want to start with something I read on CNBC this morning, because I think it perfectly encapsulates the extraordinary complacency and all around ignorance that exists on Wall Street. Discussing whether increased debt issuance could become a systemic problem, Michael Rosen, chief investment officer at Angeles, offered the following assessment:
“The question is: Is this a systemic issue? Obviously, increased debt issuance is something to observe and continue to watch and be concerned about if it continues to get to levels of excessiveness. But we’re not remotely close to that right now.”
I’m sorry. What? We’re not remotely close to excessive debt issuance?
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