Beast underneath market surface yet to 'rear its ugly head’: Bear Traps Report founder

During an interview on "Mornings with Maria" The Bear Traps Report founder and editor Larry McDonald warned of a "beast" or "serpent" beneath the surface of the market yet to "rear it's head."

LARRY MCDONALD: When you don't allow the business cycle to function over longer and longer and longer periods of time, and you don't allow price discovery. So the Fed essentially for the last 24 months, has not allowed price discovery in the market. So we're talking about on loans, on high yield bonds, on any kind of financial instrument because they were doing so much accommodation for so long. There was massive distortion of the asset prices and now because of inflation, they've been forced to really machine gun price discovery at us.

So this is a colossal failure of common sense because I think that we're really heading for a Lehman type moment here, because listening to institutional investors, the marks on private equity and venture capital are potentially off by $600 billion. We have this Lehman problem lurking. That's why the market when it rallies the last couple of months. You and I were talking about this in January. We were calling for a 30% pullback. Every rally failed because there is really a beast, a serpent underneath the surface of the market that has yet to rear its ugly head. 

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WATCH THE FULL INTERVIEW HERE: