Washington in Disarray, Ted Turner Goes Digital, Wall Street Remembers Trump

Happy Friday, and thanks as always for reading The Daily Courant, your afternoon guide to the latest and most unique programming on tap across the Puck network.

If you haven't downloaded it already, don't miss today's episode of The Powers that Be, our new podcast, featuring our intrepid host Peter Hamby chopping it up with Matt Belloni, Julia Ioffe, Dylan Byers, and William D. Cohan about the CAA-ICM merger; why Netflix and Amazon have "no appetite for news;" what it means to get the Woodward treatment; and why Wall Street is gingerly anticipating a correction in the bond markets.

Before you hit download, make sure to read Cohan's chilling report on the topic that every investment banker is talking about under their breath: the looming fear of the next recession. Plus, below the fold, don't miss Theodore Schleifer's notes on the Silicon Valley money and investor agita surrounding the Ozy Media mess.

The “Zombies” Are Coming: Wall Street Executives Await the Big One

Bankers know in their guts, as well as in their brains, that the combination of the highest stock prices and lowest bond yields in recorded history is not sustainable. A massive correction is coming.

What’s going to kill the party that has been raging on Wall Street since March 2009? That’s the question preoccupying many executives, bankers, and traders on Wall Street lately, especially since most of them agree that both the stock and bond markets are priced for perfection and that the circumstances on the ground are pretty far from perfect. 

It’s a fascinating and precarious situation. People know in their guts, as well as in their brains, that the combination of the highest stock prices and lowest bond yields in recorded history is not sustainable and that a massive correction is coming. It has to. But no one can quite figure out what will become the catalyst for the inevitable decline in the financial markets. 

Last week, it looked like the collapse of Evergrande—the Chinese real-estate conglomerate, with some $300 billion of debt—would send markets reeling around the world. There was a lot of chatter about how Evergrande would be China’s Lehman Brothers moment. Sure, there were a few wobbly days in the stock markets as a result of the fear of the (still unclear) Evergrande consequences, but the market quickly recovered after investors decided that Evergrande wasn’t the droid that people were looking for, or at least not yet. 

“We could see a material slowdown in Chinese economic growth that will ripple through the rest of the world, but not necessarily through the banking system,” is how one senior Wall Street banker put it to me. Then, of course, there is the looming prospect that the Congress might fail to raise the debt limit, causing the U.S. Treasury to be unable to fulfill its obligations—interest payments, unemployment benefits, Medicare payments—as they come due. Even the Federal Reserve’s hint that it would begin to pull back in 2022 on its luscious Quantitative Easing program—the main reason the financial markets have been rollicking for so long—didn’t have a perceptible effect on the financial markets. So what will?

FOUR STORIES WE'RE TALKING ABOUT