Episode 15: Coronavirus Special, Central Bank Action, Next Crisis To Be Triggered by Subprime Corp Loans, Aussie Housing
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Welcome to the Complexity Premia podcast from Coolabah Capital, which is hosted by Christopher Joye, CIO and portfolio manager of Coolabah Capital, and Ying Yi Ann Cheng, a portfolio management director. The Complexity Premia podcast strives to deconstruct modern investment problems for wholesale (not retail) participants in capital markets. You can listen on your favourite podcast app, or you can find it on Apple Podcasts or Podbean.
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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