There has never been a bigger load of bullshit bought and believed by more useful idiots than right now. The lethal intersection of a known con man and easy money:
It's important to remember that the subprime meltdown was not only predicted ahead of time but it was massively shorted by Wall Street in the months ahead of the October 2008 collapse. The stock market peaked a full year before Lehman.
This time around, gamblers are reaching for maximum exposure at the pinnacle of maximum risk. Having been fully drugged by the virtual simulation of prosperity and the need to make the quarter in a zero interest rate environment:
"Investors are hungry for yield, and that is forcing them to take on risk they normally wouldn't for acceptable returns".
"One of the consequences of the central banks easing again is that they are feeding the zombie companies that would be out of business by now if money wasn't so cheap and credit so easy"
Ironically, central banks have compressed yield spreads giving the illusion of low risk when risk is at maximum. The hunt for yield in a zero interest rate environment has put capital into self-destruct mode. In early January, the Fed financial stress index hit an ALL TIME low. The asinine Fed model signals lowest "stress" at the point when valuations and exposure are the highest.
"One of the consequences of the central banks easing again is that they are feeding the zombie companies that would be out of business by now if money wasn't so cheap and credit so easy"
Ironically, central banks have compressed yield spreads giving the illusion of low risk when risk is at maximum. The hunt for yield in a zero interest rate environment has put capital into self-destruct mode. In early January, the Fed financial stress index hit an ALL TIME low. The asinine Fed model signals lowest "stress" at the point when valuations and exposure are the highest.
"We've waited long enough, now is the time to buy junk"
Gamblers are well conditioned to believe that implosion is good news:
"I bought for the tax cut, but I stayed for the pandemic"
Greater fools' markets end when gamblers expect a greater fool to come along, only to find out they already did...
