Part 7/9:
On credit markets, the conversation notes that spreads are very tight, limiting cushion for adverse shocks. This tightness correlates with private credit’s prominence, even though the speaker admits not holding significant positions there. The discussion highlights how excess savings, especially in China—estimated at around $7 trillion—could fuel future consumption and investment if deployed effectively.
Yet, the market's enormous run-up has forced investors into a dilemma: recognizing potential value while acknowledging the risks that current valuation levels embody. The challenge lies in balancing participation in the remaining upside without becoming overly exposed to a possible correction when monetary policies tighten.