Complexity Premia Podcast, Episode 15

Coronavirus Special, Central Bank Action, Next Crisis To Be Triggered by Subprime Corp Loans, Aussie Housing

In this episode we discuss a range of issues, including the current market meltdown that is rapidly emulating aspects of the GFC and which will eventually present some once-in-a-generation buying opportunities:

  • We discuss how COVID-19 is a classic case of global market failure driven by extreme information asymmetries, which Chris has repeatedly explained in his AFR columns over the last couple of weeks; 
  • How central banks need to move quickly to provide a liquidity bridge to keep markets functioning given investors are struggling to realistically price existential pandemic risks (again as outlined in Chris’ AFR columns of late);
  • How the biggest risk is if central banks delay or under-club their response as lenders of last resort, which markets will punish, especially given they are rapidly depleting their prized credibility; 
  • Why the next subprime crisis will likely be triggered by subprime or high yield corporate bonds, which has been another key theme of ours for a while now; and 
  • Update on our views regarding the Australian residential property market, which we expect to remain strong.
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