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Tech is flashing a warning sign last seen in 2020. Strategist Larry
McDonald sees a massive rotation coming.
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Larry McDonald warns that investors are piling into tech stocks thinking
it’s the “safe trade,” but should be thining about hard assets instead.
32 minutes ago
Seed Newsvine
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Joseph Weisenthal at Business Insider describes this as a “magical threshold of debt.” But there’s nothing magical about it.
ReplyDeleteAs I’ve explained before, the precise mechanism for this isn’t well understood. I suspect it may largely be an effect of signaling. Very high levels of debt indicate the economy has broken down and that government’s room for ameliorative spending may be reaching its limit, which causes further private contraction. So you get into a reflexivity trap.