Yes, a disappointing fraction of armchair generals are fighting the last war.
What are the big speculative candidates for next crash? Contagion from the Chinese real estate market?
What are the big speculative candidates for next crash? Contagion from the Chinese real estate market?
Given that the Federal Reserve wants unemployment numbers to rise, they're specifically trying to make share capital worth less, and borrowing capabilities cost more, making revenue-poor corporations stop being so optimistic. so I would just expect lower valuations with much lower revenue multiples (or price to equity ratios), for that reason alone.
Slowed growth in China is always a threat because thats a key revenue driver for many large western companies. Then sure, there is the leverage and accountability problem with Chinese real estate, but I don't get the impression that contagion is that big because nobody thinks that is a safe bet and also avoid too much exposure to the domestic chinese lenders involved. The rumors behind Tether just aren't big enough to matter for this, could only be a slight sting to the commercial paper market and a moderate "finally" for the crypto market as a tether implosion would probably increase confidence there after steep selloffs.
Oil/gas volatility is probably going to have some casualties.
The Oil Glut of the 2010s killed off all but the strongest players in this sector. So I doubt it will be a pillar that collapses. If anything, they will probably do very well in the near-term.
Re: Chinese real estate, the contagion mechanism I've heard the most about isn't West->East investment, it's East->West investment that gets pulled to survive a bear market. I have no idea if it's big enough to matter.
[1]https://pivotal.substack.com/p/minsky-moments-in-venture-cap...
In the runup to the 2008 crisis, a commonly heard mantra was "yeah, subprime lending is fucked up, but it's a small fraction of the economy, it can't cause that much damage". Turned out that it could, via the CDO shenanigans.
I would not at all be surprised if someone has already cooked up a similar leveraged dependency from the "real economy" to crypto markets.
But cryptos have never been considered remotely that reliable by the broader financial system. Thus there is probably little to no leverage using cryptos as collateral. Crypto is currently crashing, but it will only take down itself and not 30 to 100 times as much leverage with it.
The main concern is stagflation due to rising energy prices. It seems like the market is now finally starting to price in the externalities of abating climate change, which results in higher energy prices across the board (which in turn raises prices of everything else, with inflation due to QE piled on top of it).
This means that output roughly stays the same, but there are more dollars competing for it.