I have been very quiet of late, largely because my focus has been on setting up the new fund. So most of my time in the past couple of weeks has been absorbed in working on the pipeline, doing some writing, and taking in the sheer immensity of the problems facing the market. Without saying too much, I think it's sufficient to note that we are seeing some situations (admittedly not in telecom) which are stunning in the rapidity of their deterioration, and we are also seeing some pieces of capital structures trading which don't trade in normal circumstances - suggesting that there may be a further unwinding of positions (possibly under duress) taking place.
On top of these sorts of capital market-centric indications of what's going wrong, there is plenty of other evidence in support of the view that we are in for many nasty new surprises. Which makes it surprising to me to read that 33% of respondents to a survey on distressed investing seem to think that the bottom is upon us now.
I disagree, and the moment of epiphany for me last week was reading that NBC's final unsold Super Bowl commercial slot went to a glorified pawn broker. Super Bowl ad slots have historically been a showcase for global consumer brands to make their most memorable statements for the year ahead. During the boom/bubble era of extravagance, the easy-going zeitgeist was reflected in the ads - now we have an interloper in the form of a company serving people feeling frightened and vulnerable enough to sell their gold for cash, despite the fact that the "smart money" is actually doing the opposite.
I was also somewhat taken aback (though, in retrospect, I'm not sure why) by a release from Equifax (not yet on the site at this writing) suggesting that a large proportion of UK respondents have at most a one-month financial cushion in the event of redundancy. It's not pretty, and thus I don't buy all this talk of a second-half recovery, because I think the stress in the system, at the small business and personal level, is perhaps more negative than many are taking into account at present. And none of this seems to take into account the specter of new nationalism and grassroots anti-globalization, which has never been a particularly positive force.
I am worried, but what the hell, it's a new week ahead. No doubt there will be worse and more ridiculous to come.
If you're finding it hard to get to sleep, here's some recommended reading material:
I will endeavour to post more frequently!