Eventually everything fades to gray.
This morning Fitch Ratings decided to be the brave first ratings agency to declare the obvious, that the Chinese property giant was in restricted default. Via Yahoo Finance:
Evergrande Declared in Default as Massive Restructuring Looms
Just how bad is it? Check out this chart from the same article above of Evergrande dollar denominated bonds:
What does this mean for the U.S. markets?
It’s not much of a move considering the bull fakeout Santa Claus rally that’s been underway and the narrative about Covid-19 being promoted by the used car financial media. But it does show that there is a blind side to the markets and a reality the equity markets does not want to face is coming over the horizon.
After Friday expect some extremely choppy sessions as the backwards looking data portends a major financial crisis right around the corner.