“The risk cycle has already turned, and the familiar canaries in the coalmine – market internals and credit spreads – have been deteriorating persistently, in the same way that deteriorating internals and subprime defaults were the first warning signs to emerge in 2007. A clear improvement on these measures would not improve the long-term outlook, but would significantly reduce the immediacy of our near-term concerns. We don’t observe that at present. To the contrary, particularly on the international front, the consequences of years of distorted capital flows and yield-seeking are already unfolding… The current, obscenely overvalued QE-bubble is simply the next reckless response to Federal Reserve actions, which followed the global financial crisis, which resulted when the housing bubble collapsed, which was driven by excessively activist Federal Reserve policy, which followed the collapse of the tech bubble. As my wife Terri put it “It’s like a rolling tsunami.”