Hedge Fund Manager Fears "Sudden, Pervasive Loss Of Faith" In Markets; Says "It's A Truly Scary Time"

Tyler Durden's picture

First it was Sam Zell, warning "it's very likely that something has to give here." Then George Soros upped his market hedge drastically, followed by Carl Icahn's "worry about excessive money printing," adding that he was "very nervous" about US equity markets. "Financial markets are euphoric," warned Stan Druckenmiller, warning that "market participants are pricing in hardly any risks," and Crispin Odey explained "there are consequences to CB actions," stating that "we have front-row seats to an imminent market shock." And now hedge fund manager Andy Redleaf (who predicted "there is going to be a panic in credit markets," in 2007) has come out with the most ominous of warnings yet among the billionaire crowd... "I think it is a truly scary time."

"Sometime in the next 12 to 18 months, there is going to be a panic in credit markets,” billionaire Andy Redleaf, a 50-year-old hedge fund manager, wrote to investors in December of 2007. "The driver in the credit market panic of 2007 or 2008 will be a sudden, profound and pervasive loss of faith in the alchemy of structured finance as currently practiced." And as CNBC notes, he is worried again...

Redleaf wrote that the stimulus used to put fresh money in markets could end poorly, just like loose credit standards in housing before 2007 crushed that market.


"We do not know exactly where all the credit creation of this cycle has gone. Certainly money sits idly as excess reserves, but just as certainly money that would not exist but for unconventional monetary policy has distorted prices and resource allocation," Redleaf wrote.


He noted that the oil market—which recently crashed from around $100 a barrel to $43 today—may have been overly inflated by China "buying on easy credit" and other excess money going to oil producers who in turn increased supply.


Redleaf also said that stock markets may similarly be propped up by sovereign wealth funds and the Swiss central bank owning large amounts of equities.


"There are some parallels with the collapse in home prices which preceded the financial crisis," he explained.


Redleaf also is worried about the euro's drop in value..."the bullish consensus on the dollar strike (is) as one-sided as anything I can remember, but it would be quite a remarkable move," Redleaf wrote of Goldman's 0.8 by 2017 prediction.


That move could mean big trouble.


"It strikes me as completely plausible that a further decline in the euro triggers a recession in the U.S.," Redleaf wrote.


"The U.S. has a bear market, high-yield spreads move to 1998 type levels (1,000-1,200 [basis points]), U.S. weakness and market tightening of credit probably make the recession global."

Of course, he is not the first billionaire, and won't be the last.

Billionaire Sam Zell

"People have no place else to put their money, and the stock market is getting more than its share. It's very likely that something has to give here."


"I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking," he said. "If there's a change in confidence or some international event that changes the dynamics, people could in effect take a different position with reference to the market."


"It's almost every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue," he said. "When you got a demand issue it's hard to imagine the stock market at an all-time high."


He also lamented about how difficult it is to call a market top. "If you're wrong on when, that's a problem." His answer: "You got to tiptoe ... and find the right balance."


"This is the first time I ever remember where having cash isn't such a terrible thing, despite the fact that interest rates are as low as they are," he added.

Billionaire Carl Icahn

Ironically, Carl Icahn - poster-child of the leveraged financial engineering that has overtaken US equity markets on the back of Central Bank largesse - told CNBC that he was "very nervous" about US equity markets. Reflecting on Yellen's apparent cluelessness of the consequences of her actions, and fearful of the build of derivative positions, Icahn says he's "worried" because if Yellen does not understand the end-game then "there's no argument - you have to worry about the excesssive printing of money!"

Billionaire Stan Druckenmiller

Simply put, Druckenmiller concludes, rather ominously, "I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy."

Billionaire Crispin Odey...

Having previously noted that "this is the best shorting opportunity since 2007-9," Billionaire hedge fund manager Cripsin Odey warns that (just as Goldman has noted) the global economy is h"eaded for recession and central banks will not be able to able to come to the rescue because they have exhausted the arsenal of policy weapons." No matter what happens, he chides, the market shrugs it off as they are "kind of relying on central banks pulling a rabbit out of a hat." They will not, "Central banks are not all singing and all dancing," and cannot avoid the consequences of what they are doing, concluding, "you and I have got grandstand seats here [to an imminent market shock]," and investors are about to "find out just how illiquid it really is out there."


One of the world's leading hedge fund managers has warned that global economies are headed for recession and central banks will not be able to able to come to the rescue because they have exhausted the arsenal of policy weapons.

And here the BIS explains broken markets so easily, even a Janet Yellen can get it:

Financial markets have been exuberant over the past year, [...] dancing mainly to the tune of central bank decisions. Volatility in equity, fixed income and foreign exchange markets has sagged to historical lows. Obviously, market participants are pricing in hardly any risks.

Growth has picked up, but long-term prospects are not that bright. Financial markets are euphoric, but progress in strengthening banks’ balance sheets has been uneven and private debt keeps growing. Macroeconomic policy has little room for manoeuvre to deal with any untoward surprises that might be sprung, including a normal recession.

So now we have five billionaires and the BIS all flashing warning signals which can only mean one thing: stocks are undervalued so buy, buy, buy ahead of tomorrow's "impatient" Fed.

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OldPhart's picture

My sudden, pervasive loss of faith in markets was in late 2008.  Still have no trust, let alone faith, in any financial instrument peddled by government, banks or wall street.

bania's picture

These paper shufflers can all go f$&k themselves

Publicus's picture

We are living in the End Times.

NoDebt's picture

"In a surprise announcement the Fed today launched what they are calling a continuation of their recently paused QE3 program.  'We are not calling it QE4, we never called an official end to QE3, we merely taperd to a then-appropriate zero purchase level and clearly indicated we could restart such asset purchases as economic conditions warranted,' said Fed Chairwoman Janet Yellen.  Markets have immediately reacted by swinging from flat on the day to a 600 point gain in the Dow by the close of trading.  After hours futures contracts are showing an additional 200 point gain"

Just a little glimpse of one possible future headline.  Don't say you weren't warned.


TruthInSunshine's picture



I keep seeing references by those in the financial sector commenting on something called a "market?"

What's that???

bwh1214's picture

Great intro of how we got here for anyone who's new or for someone you want to introduce to the mess we're in:


Karlus's picture

>>continuation of their recently paused QE3 program

Why wouldnt they do this? What does QE4 actually cost?


Besides, dont we have an inevitble election coming up? A market crash is only necessary if the wrong "guy" is winning

TruthInSunshine's picture

The wisdom of Seinfeld on markets in addressing Eileen or Kramer's naivety:

"KEEPING/RETAINING your money is the goal."

smlbizman's picture

ah yes,...the cnbc wall of worry....everyone into the pool....

Gambit's picture

I down voted you NoDebt, cuz that would mean the charade goes on, time for it to end so we can start healing.

NoDebt's picture

It doesn't happen on our schedule, Gambit.

Greenskeeper_Carl's picture

He was saying 'one plausible scenario'. While I don't happen to think he scenario is likely tomorrow, I think it is almost assured at some point in the future. If you don't think that can happen, you must not have been paying attention for the last few years.

thecrud's picture
thecrud (not verified) NoDebt Mar 18, 2015 9:44 AM

Combine this with nutty politics and social unrest caused by things like shaking down motorist for the funds to run cities

No telling where Libritarinism is taking us but it wont be pretty and the cost off all will be paid in a DOW 1000 I have lived through several DOW collapses with out all this strife the difference this time will be no return to business as usual.

And I think this is the actual plan.


new game's picture

you or i could make a shit ton but not see a dime of it. if the shtf do you think the brokers/bankers are going to let you get your loot from them?

p00k1e's picture
Update:NWO's Project Blue Beam and the real reasons for Chemtrails!




BABYLON THE GREAT FALLS IN ONE HOUR!!!!And the kings of the earth, who have committed fornication and lived deliciously with her, shall bewail her, and lament for her, when they shall see the smoke of her burning,10Standing afar off for the fear of her torment, saying, Alas, alas, that great city Babylon, that mighty city! for in one hour is thy judgment come.

11And the merchants of the earth shall weep and mourn over her; for no man buyeth their merchandise any more: 12The merchandise of gold, and silver, and precious stones, and of pearls, and fine linen, and purple, and silk, and scarlet, and all thyine wood, and all manner vessels of ivory, and all manner vessels of most precious wood, and of brass, and iron, and marble, 13And cinnamon, and odours, and ointments, and frankincense, and wine, and oil, and fine flour, and wheat, and beasts, and sheep, and horses, and chariots, and slaves, and souls of men. 14And the fruits that thy soul lusted after are departed from thee, and all things which were dainty and goodly are departed from thee, and thou shalt find them no more at all. 15The merchants of these things, which were made rich by her, shall stand afar off for the fear of her torment, weeping and wailing, 16And saying, Alas, alas, that great city, that was clothed in fine linen, and purple, and scarlet, and decked with gold, and precious stones, and pearls! 17For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off, 18And cried when they saw the smoke of her burning, saying, What city is like unto this great city! 19And they cast dust on their heads, and cried, weeping and wailing, saying, Alas, alas, that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.

Enceladus's picture

The end of these times...

and thank God

Chuck Knoblauch's picture

Mine was in 1998 when I bought stock after a sell side analysts rec.

Never again.

Harbanger's picture

It's easy to make money once you understand the psychology of the herd.  Bet against them, it's a sure win.  Buy when People have given up on something, they'll surely come around to the same stupidity once again.

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) OldPhart Mar 17, 2015 5:15 PM

I am way past "loss of faith" and have entered the rage and anger phase.

junction's picture

Why the sudden loss in confidence by this motley group of liars, thieves, extortionists, bankruptcy fraud criminals and cokeheads?  The USA has in charge now about the same bunch of satanists, perjurers, crossdressers, dope dealers, rapists, conspiracy murderers and pedophiles as ten years ago.  Probably Cokehead-in-Chief Obama and his New World Order handlers are shaking these guys now for even more money in protection payments to avoid indictment for their numerous unsavory crimes.  The USA now really is like Chicago in the 1920s, with mob killers running the show.

Ness.'s picture

I was in Chicago in the 1920s.  What we are witnessing is nothing like Chicago in the 1920s.  In the 1920's the bad guys ended up floating in the Chicago river with two shots to the back of their head.  

This is much, much worse.


Capitalism is the legitimate racket of the ruling class.

I am like any other man. All I do is supply a demand.

“It’s a racket. Those stock market guys are crooked.”

~Al Capone.

Usurious's picture
Usurious (not verified) Ness. Mar 17, 2015 8:01 PM



Anthony Migchels writes....

''Capitalism is Usury. Its defining belief is ‘return on investment’. This is an extension of the ‘time value’ of money, which is the central tenet of modern economics. Capitalism is unthinkable without banking and banking is institutionalized Usury. ''


TeethVillage88s's picture

This is much, much worse wow I'm kinda scared.

You're quote is scary, applicable and a leading indicator.

This thread accurately looks at power, mafia, organized crime, and typical conversation in any military boot camp.

semperfi's picture

2000 for me - "tech bust"

I Write Code's picture

You, me, Alan Greenspan and Ben Bernanke.  The problem is, what do you do instead?

RmcAZ's picture

If everyone in the markets perceives there is no risk, then is there any risk?

FMOTL's picture

That baby looks like he,s just seen a circumcisionist cult member with a sharpened thumb nail

dimwitted economist's picture

AAAAHHHHH!!!!! We're ALL Fucked!!!!!! AHHHHH!!!!!

long-shorty's picture

this article is confusing. do I BTFD or not? why would I not BTFD?

Model T's picture
Model T (not verified) long-shorty Mar 17, 2015 7:00 PM

No, you don't buy the dips; you sell the tops. You buy dips in a bull market, you sell tops in a bear market. I've been shorting these fantastic S&P500 rally tops for the last several cycles. Short now again from yesterdays high' already in the money today; sooner or later you'll participate in a big move, in the meantime you maintain familiarity with the behaviour of the beast and book profits.

Ness.'s picture

Volume is to the downside. The rally's are illiquid and driven by buybacks/desperation/Algo spoofing.  


I'd rather be two years too early than two minutes too late.

messystateofaffairs's picture

Now now now, remain calm and carry on.

venturen's picture

Ho-Hum market will go up 500 points crushing all those who don't believe in the power of money printing.

In other news this headline from NYT 


"Could Obama Bypass the Supreme Court?"


The absurdity just keep coming

TheReplacement's picture

Ever try reading the comments on articles like that?  Sometimes I jump in but it is like explaining the internal combustion engine to a hungry chicken.  Cluck, cluck, cluck...

Bay of Pigs's picture

These markets are FUBAR...

When gold and silver start to rise you'll know when the worldwide stock collapse has begun.


deflator's picture

 When you see the dollar going parabolic is when you know big players are front running a stock collapse. 


nmewn's picture

Everyone got their trailing stops locked in?


Two don't so far, suckers ;-)

allinwood's picture

someone just shit the diaper!

swmnguy's picture

It might be hard for Serbs or Somalis to hear it, but letting Finance off the leash was the most destructive and evil thing Bill Clinton did as President.  NAFTA etc. was a part of that too.  The two milestones that, even at the time, told us we were going to be uck-fayed were the repeal of Glass-Steagall and the "Securites Modernization Act of 2000."

Of course the billionaires are worried, but not about a crash.  Who do you think pulls out the rug periodically, causing these crashes?  Whomever is positioned to make a fortune into a nutty cuckoo super-fortune, that's who.  Them, in short.  What they're worried about is that us pigeons might get wise, and not be there to be plucked when they decide the time is right.

Fish Gone Bad's picture

the most destructive and evil thing Bill Clinton did as President

considering how well the Clintons emerged after creating so very many enemies one would think "someone in power" was watching over the Clintons.  Does anyone honestly think our presidents really are all that clever to write all this give-away legislation and let the banks run amuck?

Wahooo's picture

That's the one. What's he doing (to people) these days?

e_goldstein's picture

Figuring out new and complicated ways to fuck them:


swmnguy's picture

Again with the Italics!  I wanted to give you some greenie for that one.

Yes, the Clintons and all the rest of them are very dutiful employees.  They should be, given the intense vetting involved in the hiring process.

The worst thing is these Democrats of the past few decades really seem to think all there is to an economy is stock markets.  Must come from having grown up feeling inferior to wealthy people, and being eager to please authority figures for personal benefit.  So it's not at all hard for them to let the bankers tell them what to do.  At least the Reagans were absurdly and slavishly fawning over the most vulgar of the wealthy.  It was right there on the surface.  But still they understood that business, and the overall economy, have relatively little to do with the second-hand trade in stocks in a healthy environment.  The Obamas, Clintons and their ilk have no such clue.