Lead-Lag Live: Something Is Breaking
A handful of market analysts have warned that the current selloff could get far worse… and quite quickly. That’s because the rapid increase in interest rates this year and selloff in asset prices could lead to some trouble in markets such as the credit market.
If something does end up breaking, that could cause a sudden shift in the current interest rate hike policies being carried out by central banks globally.
Or it could mean a market intervention that could cause markets to shift higher or lower.
Currently, central banks spent 2022 raising interest rates after two years or being overly accommodative. The Fed raised rates at the fastest rate in 40 years. And coming off of zero percent rates, it was the equivalent of standing on the brakes, not tapping them.
Nevertheless, after 50 years of continued monetary debasement by central banks, all asset classes have arguably been in a bubble.
There’s also the growth of the derivative market. That’s now valued at multiples of the global economy, and any break in the global economy could prove catastrophic.
While there are some potential investments that could avoid overleverage and money printing such as bitcoin, there’s high volatility. Investors who aren’t capable of handling those big swings could end up missing out on a reasonable opportunity.