Submitted by Taps Coogan on the 19th of March 2020 to The Sounding Line.

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Grant’s Interest Rate Observer founder and editor, Jim Grant, recently spoke with CNBC about his take on the market selloff and Coronavirus outbreak. Despite being a long time critic of the fundamentals driving this expansion (or the lack thereof), and despite warnings about degraded corporate balance sheets, Mr. Grant believes that markets have succumbed to “simple panic” and “things are for sale that you’d want to own.”

 

Some excerpts from Jim Grant:

“Well, we are at kitchen sink level (with regards to monetary policy)… The impulse in this period to meet a crisis like a lion, that is an age old impulse for central bankers and that is what they are doing. What is different these days is that we have been meeting non-crises like lions. We have upon many occasions not been overly nice (conservative) in the proceeding ten years to this. So we go into the crisis, as it were, with a compromised corporate financial immune system, huge leverage, very low quality debt, and very high equity valuations, with the result that… we have two panics: a hypochondriacal panic and a financial panic and the financial panic is aggravated by the events following 2009 and proceeding February 2020…”

“We have hedge fund titans talking about the end of time but it seems to me that what we are about, to a degree, is simple panic… What we are trying to do is looks for opportunities in chaos, mispricings… There are things for sale that you’d want to own.”

While a degree of panic seems entirely warranted and helpful in containing the spread of the Coronavirus, which has the potential to kill a lot more people than the other risks Mr. Grant mentions, his broader point is worth noting. When a long time critic of this expansion suggests that the selling is getting out of hand, it’s at least worth considering.

There is more to the interview so enjoy it above.

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