The bond market is screaming. Wall Street is listening. Retail traders are buying the dip on leveraged ETFs they don't understand.
Higher rates might stick around. This terrifies people who built entire careers on the assumption that money would stay free forever. Turns out when you borrow at zero percent for fifteen years, you get used to it. Like a trust fund kid getting used to never checking prices.
Something will break, they say. They've been saying this for three years. Nothing has broken yet except the portfolios of people who shorted bonds in 2021 and held on because they read one book about Paul Volcker.
The alarms are ringing. Everyone can hear them. Nobody knows which building is on fire. Could be commercial real estate. Could be zombie companies that only exist because debt was cheaper than a used Honda. Could be nothing. The alarms might just be ringing because someone burned popcorn in the breakroom.
Wall Street fears higher rates the way vampires fear sunlight. Except vampires have the good sense to stay in their coffins. Wall Street writes op-eds about how this time the Fed has gone too far and rates above 4% will destroy civilization as we know it.
Civilization survived rates at 15%. It will survive rates at 5%. What won't survive is the business model of companies whose entire strategy was "borrow money forever and figure out profit later."
Retail traders see the headlines and panic-sell their index funds at a loss. Then they buy tech stocks on margin because some guy with 847 Twitter followers said the bottom is in. The bottom is not in. The bottom is never in when you're looking for it.
The chance that rates stay higher is unnerving. The certainty that most investors have no plan for that scenario is f*cking hilarious.
Photo by Niki Clark on Unsplash
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