Guggenheim's Minerd Says Market Slide Can Become Systemic Risk

(Bloomberg) -- The turmoil emanating from global stocks to bonds and a dearth of buyers in credit markets could spill over into the real economy and become a systemic risk, according to Scott Minerd.

As the era of quantitative easing gives way to increasingly tighter policy, investors are reappraising their outlook for global economic growth. The chief investment officer at Guggenheim expects these liquidity constraints in markets to feed through to a U.S. economy that the Federal Reserve just acknowledged is less able to handle higher borrowing costs that it previously believed.

“We’re running the risk here that this can move toward something systemic,” he told Bloomberg TV. “The fact that it’s becoming harder and harder to find the marginal buyers in credit is telling us that, as I’ve mentioned before, there isn’t enough liquidity in the system. If this continues long enough, we could be subject to a severe asset-price break which was by definition a systemic decline.”

--With assistance from Tom Keene and Scarlet Fu.

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net;Michael McKee in New York at mmckee@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Andreea Papuc, Cormac Mullen

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