Forbes – At the Ira Sohn conference Wednesday, rock star investors gave their best picks to a well-dressed group of 2000 attendees from hedge funds and mutual funds around the world. At the 17th Annual Conference, where proceeds go to fund pediatric cancer research, portfolio managers hung on every word of the billionaire speakers. No wonder trades are highly correlated. The conference highlighted red flags from the bearish speakers.
The Chinese have funded many of their major infrastructure projects with dollar-denominated debt, and the funding source (the US) has dried up. Unfortunately, the Chinese government may need more cash to complete the infrastructure projects. The projects don’t generate adequate cash flow and are non-self-sustaining. With the increased credit risk, spreads could widen making new loans more expensive.
