If you participate in financial markets the video below is a must watch.
Carl Icahn and Larry Fink, BlackRock Chairman and CEO discuss the state of today’s financial market. As a quick summary…..
Carl Icahn: High-yield market is about to blow up (he indicated previously that he has a large short position there or building one). Just as it did in 2007-2009. This will have a net negative impact on the stock market. Just as it did in 2008.
Larry Fink: No way in hell, we don’t have the leverage we had in 2007.
My Comments: I believe Carl Icahn is on the right side of the trade here. The massive amount of leverage Larry Fink dismisses is still there. Its just that a large chunk of it got shifted onto the FED’s balance sheet and the stock market.
Here is what I believe the trigger point will be: As soon as investors lose “net faith” in the FED you will see this whole thing fall apart. Fast. As far as I am concerned they have already lost the window of opportunity to raise interest rates. They will now be stuck in the worst case scenario…..zero interest rates, no way to stimulate as another round of QE can backfire and collapsing capital markets. As soon as investors come to this realization, the jig will be up. And that should happen much sooner than most people anticipate.
Anyway, watch this video. It is definitely worth 5 minutes of your time.
