Bank of America: “The Last Time We Saw This In The Market Was 2007”

Friday, April 20, 2018
By Paul Martin

by Tyler Durden
ZeroHedge.com
Fri, 04/20/2018

Yesterday, we presented readers with a troubling note from Morgan Stanley which attempted to answer arguably the only question that matters for the future of risk assets: “is the late stage credit cycle about to crack?”

And with just under $1 trillion in anticipated stock buybacks in 2018 – which would be almost entirely funded through new debt issuance – whether or not credit remains a viable, and cheap, funding pathway has become the single most important question in the financial world.

For those who missed the note, Morgan Stanley – which has been turning increasingly pessimistic in recent months largely as a result of the ongoing tightening in global liquidity and central bank financial conditions – warned that the credit cycle is on its last legs, noting that “in our view, a key driver is simply that global liquidity conditions are tightening, and markets are coming to the realisation that the process will be rocky. Rising funding stresses, weaker flows, weaker trading liquidity, higher volatility – this is arguably what quantitative tightening feels like and, in our view, these dynamics will continue to pressure credit spreads over the course of the year.”

The Rest…HERE

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