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September 17, 2019 | Money Market Strains Warn of Elevated Capital Risks

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

As the US Fed debates its next rate announcement tomorrow, a liquidity crunch in overnight lending rates in the repo market prompted the NY Fed to inject $53m into the US banking system today.  See: Unhinged Money Markets trigger Fed action to alleviate stress.

Rate spikes threaten to spread and push up borrowing costs for companies and consumers who are highly indebted and vulnerable late in this long leveraging cycle.  It’s also the kind of development that can un-nerve misplaced confidence in over-valued, over-bought financial assets.

This is another reminder to all but the comatose, that capital risks are very elevated.  This clip from Lance Roberts gives a quick overview of some key factors to watch.

There’s a buzz about the recent spike in interest rates…with a general feeling ‘it’s okay’ because markets are still rising–but what if…? Here is a direct video link.

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September 17th, 2019

Posted In: Juggling Dynamite

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