The financial markets today are looking very much like they did a decade or so ago. And that can mean only one scary thing: Trouble is imminent.
Just as they did in much of 2007 and 2008, before the markets exploded in a crisis of epic proportions, investors in the debt market, which is even larger than the equity market, are feverishly chasing higher yields and are too eagerly buying up the risky securities that will deliver those yields without demanding the proper premium for the risks being taken. A decade ago, the high-yield investment du jour pushed by Wall Street was mortgage-backed securities — home mortgages that had been packaged up and sold as “safe” investments all over the world. Nowadays bankers and traders are pushing another form of supposedly “safe” investment, the “collateralized loan obligation,” or C.L.O.
https://www.nytimes.com/2019/03/18/...l?action=click&module=Opinion&pgtype=Homepage
Just as they did in much of 2007 and 2008, before the markets exploded in a crisis of epic proportions, investors in the debt market, which is even larger than the equity market, are feverishly chasing higher yields and are too eagerly buying up the risky securities that will deliver those yields without demanding the proper premium for the risks being taken. A decade ago, the high-yield investment du jour pushed by Wall Street was mortgage-backed securities — home mortgages that had been packaged up and sold as “safe” investments all over the world. Nowadays bankers and traders are pushing another form of supposedly “safe” investment, the “collateralized loan obligation,” or C.L.O.
https://www.nytimes.com/2019/03/18/...l?action=click&module=Opinion&pgtype=Homepage
