Another day another meltdown in risk markets. As shown below, non-investment grade bond prices are leading the S&P 500 down to their level, as their yields gap wide with a new found appreciation for the growing default risk in many highly levered sectors.
With cash flow evaporating by the hour in the energy sector–and therefore all the many governments and businesses who have been feeding on it–eyes are now focusing on the reckless levels of debt that was taken on during the heady days of ‘QE-confidence’.
“What were we thinking?” is a phrase back in vogue. The answer of course: ‘You weren’t thinking, you were following false prophets.’
;
