Spending five minutes on this blog or talking to me will give you the clear impression that I am skeptical about the credit markets, and that I think this risk might spread further. The following highlights a similar concern amongst fund managers in a recent survey, though they remain optimistic about the equity markets.
Credit risk poses greatest risk to stability: survey
Signs that the cracks are spreading abound, and as the Bear Stearns funds now appear to be almost worthless, rumors that other funds are beginning to implode is not only not suprising but expected:
Hedge Fund Meltdown Rumors: Chapter Whatever
What the long term effects of this will be remain unclear, but one thing that is certain is that the alternative investment universe who previously had been riding a wave of liquidity to the IPO market is now seeking a more challenging environment:
Bell Canada bondholders to sue company over LBO
As the prospect of a smooth sailing IPO has become more challenging, true to form, Goldman seems to have provided an alternative outlet by creating a "private market" of sorts for them to seek refuge and gain liquidity at the same time:
Apollo set to list shares on ‘private’ new market - Times Online
And who knows...maybe all of this is an overreaction and the true contrarian play is to be long subprime and credit. At least some people think that might be the way to go:
Black Pearl Sails Into Subprime Seas
I for one, remain just a bit skeptical...at least until there is more red on the street.
Wednesday, July 18, 2007
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