by Wolf Richter • • Comments Off on The Brutal, Beneath-the-Surface, Slo-Mo Crash of Stocks
Even while the googly-eyed mainstream media celebrate the Dow’s record high, beneath the gloss, thousands of stocks are getting gutted. And the carnage is spreading.
by Wolf Richter • • Comments Off on Explosive Hidden Leverage Threatens To Blow Up the Markets
We don’t know what hedge fund manager Steven Cohen will do with the money he borrowed from Goldman Sachs. We don’t even know how much it is, though it’s a lot; the personal loan is backed by his $1 billion art collection. But we know how he’ll use it: cheap leverage.
by Wolf Richter • • Comments Off on Banks And Hedge Funds Make Curious Deal On New Structured Toxic-Waste Securities
New regulations force banks to get rid of CLOs. They’re similar to subprime-mortgage-backed CDOs that blew up in 2008. But CLOs are backed by junk corporate loans, including malodorous “leveraged loans.” And they’re booming again. So the banks made a deal.
by Wolf Richter • • Comments Off on Biggest Credit Bubble in History Cracks, Trips Up The Smart Money
For years, nothing could slow the tsunami of junk debt. But suddenly, something happened, and investors in leveraged-loan mutual funds, where the crappiest junk debt accumulates, ran scared and started pulling their money out. Consequences were immediate.
by Wolf Richter • • Comments Off on Biggest Credit Bubble in History Runs Out Of Time
Yield investors, driven to insanity by the Fed’s interest-rate repression, hold their noses and close their eyes to scrape up even the crappiest paper just to get a little extra yield. “On the way in, there’s insatiable demand.” Alas, “it’s going to be a disaster on the way out.”
by Wolf Richter • • Comments Off on “It’s not a bubble,” Retail Investors Are Told As The Smart Money Bails Out
“Biotech Stocks’ Rout Perplexes Analysts” the WSJ headlined the phenomenon, as analysts continue to hype this stuff to small investors. But hedge funds are dumping stocks, and private equity firms are dumping their LBOs. That’s the Smart Money. They’re getting out.
by Wolf Richter • • Comments Off on Biggest Credit Bubble in History Flashes Warning: ‘Seek Cover’
Hidden in the IMF’s Global Financial Stability Report is a doozie of a chart. “Seek cover, implosion in sight,” it screams. It depicts the bubble in covenant-lite and second-lien loans, the same that helped blow up the banks in 2008. Only this time, they’re even worse.
