{"id":27724,"date":"2017-11-07T21:20:48","date_gmt":"2017-11-08T02:20:48","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27724"},"modified":"2017-11-07T21:20:48","modified_gmt":"2017-11-08T02:20:48","slug":"the-next-crisis-will-reveal-how-little-liquidity-there-is","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27724","title":{"rendered":"The Next Crisis Will Reveal How Little Liquidity There Is"},"content":{"rendered":"<header>\n<h3 class=\"flipboard-subtitle\"><a href=\"http:\/\/www.mauldineconomics.com\/editorial\/mauldin-the-next-crisis-will-reveal-how-little-liquidity-there-is\/zhb#\">The Next Crisis Will Reveal How Little Liquidity There Is<span style=\"color: #333333; font-size: 16px;\"><\/span><\/a><\/h3>\n<\/header>\n<div class=\"body\">\n<p>This is something I\u2019ve been pondering for some time. I think the next crisis will reveal how little liquidity there is in the credit markets, especially in the high-yield, lower-rated space.<\/p>\n<p>Dodd\u2013Frank has greatly limited the ability of banks to provide market-making opportunities and credit markets, a function that has been in their wheelhouse for well over a century.<\/p>\n<p>However, when the prices of <a href=\"http:\/\/www.mauldineconomics.com\/go\/v37tzf\/zhb\" target=\"_blank\" rel=\"noopener\">massive amounts of high-yield bonds that have been stuffed into mutual funds and ETFs<\/a> begin to fall, and the ETFs want to sell the underlying assets to generate liquidity, there will be no buyers except at extreme prices.<\/p>\n<p>My friend Steve Blumenthal says we are coming up on one of the greatest buying opportunities in high-yield credit that he has ever seen. And he has 25 years of experience as a high-yield trader.<\/p>\n<p>There have been three times when you had to shut your eyes, hold your breath, and buy because the high-yield prices had fallen to such extreme levels. That is going to happen again.<\/p>\n<p>But it is going to unleash a great deal of volatility in every other market. As the saying goes, when you need money in a crisis, you sell what you can, not what you want to. And if you can\u2019t sell your high-yield, you end up selling other assets (like equities), which puts strain on them.<\/p>\n<p>But that is not just my view. Dr. Marko Kolanovic, a J.P. Morgan global quantitative and derivative strategy analyst, has written a short essay called \u201cWhat Will the Next Crisis Look Like?\u201d and it\u2019s this week\u2019s\u00a0<em>Outside the Box<\/em> (subscribe to this free weekly publication here)<em>.<\/em>\u00a0He sees additional sources of weakness coming from other areas, too.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Next Crisis Will Reveal How Little Liquidity There Is This is something I\u2019ve been pondering for some time. I think the next crisis will reveal how little liquidity there is in the credit markets, especially in the high-yield, lower-rated space. Dodd\u2013Frank has greatly limited the ability of banks to provide market-making opportunities and credit [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[181,8226,487,7758],"class_list":["post-27724","post","type-post","status-publish","format-standard","hentry","category-economics","tag-crisis","tag-john-mauldin","tag-liquidity","tag-mauldin-economics"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27724"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27724\/revisions"}],"predecessor-version":[{"id":27725,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27724\/revisions\/27725"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}