Month: August 2022

Financial Times/Satyajit Das/8-11-2022

“Just as US subprime mortgages were at the heart of the 2008 financial turmoil, a future crisis may centre around booming private markets. Believing they had found the latest formula for success, investors have ploughed about $9.8tn into unlisted equity, private credit and early stage or new venture funding. Alongside well-known problems — overvaluation, optimistic assumptions, aggressive accounting and high debt levels, there are additional concerns.”

USAGOLD note: With interest rates on the rise – and systemic risks – analysts have identified several trouble spots that could ignite the next 2008-style monetary crisis. Das identifies large private capital pools as one of them. Here, the issue is liquidity and ultimately trapped capital……

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Financial Times/Brooke Masters/8-13-2022

“Ultimately the Fed has got an extraordinarily difficult job. It [the economy] is a very large plane they are trying to land on a very short and very narrow runway. They could stick the landing. I just think it will be hard.” – Paul Britton, Capstone Investment Advisors

USAGOLD note: Another of several problem areas (see above) – the corporate bond market. We’ve mentioned it as a possible source of problems in the past. We pass along this warning because it comes from someone who monitors the bond market closely. Financial Times calls Capstone’s Paul Britton one of the world’s preeminent volatility specialists. “Any intervention they make to stabilise markets,” he says, “is going to be significantly smaller [than previous efforts] and the market is going to be severely disappointed.” One can imagine considerable congestion at the exits once that lack of support becomes evident.

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