Please find above an interesting video on ABC’s The Business with Gerard Minack, the soon to be ex-Chief Global Equity Strategist with Morgan Stanley.
In this interview, which is Minack’s last before leaving Morgan Stanley, he provides his outlook for the global economy.
Minack warns that low interest rates are creating an environment akin to 2006. He sees lending standards weakening and Emerging Market debt and low quality corporate debt blowing out.
Minack, who said he would take time off before establishing his own advisory, warned on the same theme when he visited MacroBusiness in March noting:
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“What will cause the next crisis is a good question. Personally I doubt that central bankers in do-what-it-takes mode will let sovereign debt, or even mortgage debt, be the stress point. My view is that it will be something outside their control. So my thought is that it’s EM debt or low quality corporate debt. As an aside, note the corporate debt to GDP is at all time highs in the US. Credit measures look OK, for now, because earnings are so high and rates so low. And note that there has been no deleveraging outside of the USHaving said all that, I doubt any of this happens this year. So perhaps we can again party like it’s ’99. But also remember that through the credit super cycle bubbles and the following crises have been quite common.”
