How Long Will This Last ?

As hedge fund redemptions pile up, there is every sort of debt instrument for sale, particularly hybrids (fixed to floating preferreds) and preferred shares.

There are a bunch of funds that used the securities as a funding vehicle. Now they are funding out what happens to perpetual securities when spreads blow out.

The real problem, though, is that selling begets selling. Individuals, jammed full of this stuff, will panic and sell for a tax loss.

Then there are four more problems:

1. Quarter end balance sheet pressures on 9/30.
2. Mutual fund fiscal year ends 10/31.
3. Brokerage firms fiscal year 11/30.
4. Year end 12/31.

I don't see this market rallying until we get past these dates and it will make it awfully tough on those that need capital, which is nearly everyone.