All the traders are saying it will get worse, but companies are saying everything is way underpriced. Historically I think traders have had no understanding of market direction more than a few months out (and the only reason they are right in the short term is because they are responsible for moving markets in the short term). Underlying asset values are something traders are trained not to understand, while companies understand market direction a lot better.
My point is that corporate profits are really high, unemployment is really low, and companies are flush with cash and buying back shares at record levels thinking their stocks are undervalued.
I think those are stronger indicators of future market direction.
edit: Also, no companies are issuing debt right now, probably because they think they will be able to soon again at lower rates.
Yes and no (but mostly yes). That is really only the case when there is a period of rising interest rates, which is not exactly the same as high interest rates. Defaults tend to spike up when entities (corporations or households) over extend themselves with low cost debt that they have roll over at higher costs they didn’t plan for. But in periods of sustained high interest rates there is just less lending and borrowing overall because lending standards increase (absent government intervention).
2008 was “different”, sure, because literally every economic environment is different from every other one. One of the warning signs of increasing CDS spreads is that there is some risk of another 2008-type of financial crisis where there is a death spiral of defaults triggering lock ups in the credit market and the illiquidity punches the economy in the face. As with all economic signals there is a “tea leaf reading” aspect to it so you can’t predict anything with certainty.
This is a reasonable view. The opposing view is also reasonable. This is why active trading so often fails, there are numerous opposing reasonable views so nobody ever really truly knows what the fuck they are supposed to do.
oh good a major bank (credit suisse) may be in trouble, just what was needed
kinda simple right now if you think they’re going back to money printers you gotta throw your money somewhere so stonks, if not, I wouldn’t touch most of them.
obviously this isn’t the issue, of course, that is, does any other major bank or more have decent exposure to them and isn’t liquid enough to handle that
There is no new issue because all but the most pristine corporations couldn’t issue new debt at any price in the current market and banks won’t underwrite anything.
Aus central bank only doing a 25bp rise after it had been considered a foregone conclusion that it would be 50bp (and some even thought 75bp) until maybe two days ago (major banks as of a few hours ago still stating explicitly that it was very likely to be 50bp). Use some language like matching demand and supply in the economy but also
Obligatory accompanying insta 1% stonk for aus market:
I just came here to post this.