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Old 12-24-2018, 03:45 AM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,892
Kicking off the death spiral.

12/23 ‘Stunned’ by recession talk — El-Erian warns of self-fulfilling prophecies – CNBC
Everybody and their dog knows that the stock market has bubbled up to about 2.5 times historical valuation. They have all been edging to the exits just waiting to make a break. If the HUGE ETFs have stopped buying the dips, it is definitely time to get out.

Big Funds Begin Liquidating As Panic Grips The Loan Market
Look at the collateralized loans origination.
The credit market is rapidly deflating.
The banks are forced to keep sketchy loans on their books because nobody will buy them. This cuts back on both their stock price and, their income. Just imagine if they are never able to sell them.

Sovereign debt, "“$20 trillion got to $21 trillion in 186 days" "Global debt rose from 276% of global GDP in 2007, wallowed through the Great Recession, came out the other side topping 327% of global GDP, and continues to expand at >10% per annum.ref 324 Simon Black notes that while the economy grew 36%, the debt grew 123%.ref 325"

Credit "Death Spiral" Accelerates As Loan ETF Sees Record Outflow, Primary Market Freezes
"but over 800 million has been pulled in last current month, the biggest monthly outflow ever as investors are packing it in."
"Incidentally the behavior described by Citi's strategists, in which ETF administrators first sell high quality paper then shift to deep discount holdings, was one of the catalysts that hedge fund manager Adam Schwartz listed three weeks ago as a necessary condition for credit ETFs to enter a "death spiral." And with virtually everyone - including the Fed, BIS and IMF - all warning that the next crisis will begin in the leverage loan sector, the question to ask is "has it begun"?"
"In Europe, the market appears to have already locked up, "
"According to JPM, the percentage of loans trading above face value has dropped to just 3.9%, a 29-month low, down from 65.4% in early October. This suggests that virtually all leverage loan investors are now underwater on a total return basis."
"that are so deep underwriters may have to book a loss, if they can be sold at all. This is precisely what happened in late 2007 and early 2008 when underwriters found themselves with pipelines of debt sales that sudden got blocked, "
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