"Strap In": Looming Credit Crunch Means Junk Bond Defaults Will "Surge Higher"
38 year market veteran Kenny Polcari offers his take on what he thinks will be a coming credit crunch. He calls junk bonds "the canary in the coalmine".
Friend of Fringe Finance and well known financial news contributor - as well as 38 year veteran of markets - Kenny Polcari has been kind enough to share his most recent thoughts on the market with our readers.
I’ve been lucky enough to be friendly with Kenny for about a decade now, and he was the first guy to ever take me on what I can only describe as an unauthorized tour of the NYSE trading floor, where I got to personally tell several confused specialists and market makers that the Chinese names they were trading were frauds that didn’t even exist.
The tour didn’t last as long as I would have liked, to say the least. But I’ve always appreciated Kenny’s willingness to welcome people into his busy world for nothing in exchange, and his decades of experience, which gives you a pulse on markets that only time can help you recognize.
For those who aren’t familiar with Kenny or don’t recognize him from TV, he is Managing Partner of Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth. He started his career on the floor of the New York Stock Exchange (NYSE) as an institutional broker back in the early eighties when the march of electronic trading was already taking its first steps, and the great bull was first learning to run.
I’m happy to offer up Kenny’s latest thoughts on the week’s trading so far.
The post has been lightly edited for punctuation and grammar.
Kenny’s Thoughts From Mid-Week
Economic data showed us that the US Services PMI either rose or fell – depending on which data point you choose to look at - the S&P Global US Services PMI plunging even more than expected coming in at 43.7 – deep into contractionary territory – while the ISM survey reported that Services PMI surged to 56.9 – which would put us well into expansionary territory – so which is it?
My guess is Door #1, the S&P Global metric.
And then we had all of the drama on Monday in Europe and the Middle East over oil and natural gas: OPEC+ cutting production while Russia halted natural gas to Europe after the West imposed sanctions on Russian oil over Putin’s invasion of Ukraine.
And now that winter is coming, Europe is the one that is about to suffer, because leaders there got into bed with Putin, leaving themselves vulnerable to his desires and, right now, he is not desiring Europe.