"NEW YORK (Reuters) - Financial markets are vulnerable to a significant correction in the next 12 months that might be triggered by an event in the derivatives markets, a well-known municipal bond manager said on Tuesday.
'I will be very surprised if we don't get an accident in the next months,' Thomas Metzold, who invests roughly $4.5 billion in the Eaton Vance National Municipals Fund, told the Reuters Investment Outlook Summit in New York.
'Whether it is in the credit default swap market or a leveraged buyout scenario, there is going to be a major default and all this liquidity that is out there can dry up pretty quickly,' Metzold said.
Looking back to 1998 when hedge fund Long Term Capital Management collapsed, Metzold said the biggest problem was that LTCM had so much exposure to counterparties that none of them knew how much the others had. 'And it all came tumbling,' he said."
No comments:
Post a Comment