Leveraged to the Tilt

This is getting a bit insane - the loose monetary policy in the US has created a monstrous surge in liquidity which has translated into an enormous appetite for assets ... varying from junk bonds to real estate to art pieces to commodities.

Check out the 'surge' in leveraged buyouts on the left.

This increase in demand for assets have also lead to inflationary pressures on prices. Which partly explains why central banks all over the world (Singapore excluded) are trying to tighten their monetary policy by raising rates. This increase in rates will have a dampening effect on the stock market. Worse still will be the credit markets - with each rate reset, the lenders are going to demand for more return on the risky assets which they are holding.

Hang on to your seats - it is going to be quite a wild ride for the next half of the year.