That brings us to our call of the day from Davis, who told MarketWatch that corners of the debt market, particularly private credit markets like leveraged loans, are ”very frothy,” because “a lot of investors have used leveraged loans” as a way of getting richer yields.

“It’s definitely bubblicious,” Davis said. She also said those complex purchases of loans, which are used partly to finance private-equity transactions, may be fostering much of the current volatility exhibited by global equity markets.

The leveraged-loan borrowing in the U.S. has quietly ballooned over the past two years, surging way beyond levels since during the 2007 financial crisis. Such borrowing in the U.S. hit a record in 2017 at $1.66 trillion and was at $1.46 trillion in 2018, according to Dealogic. That represents the biggest two-year growth ever in the industry (see table below).

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Part of Davis’s argument is that investors in leveraged loans are subject to multiyear lockup periods where they cannot sell those assets, which, as a byproduct, forces those large investors to seek liquidity by selling public assets, such as stocks.

American manufacturers grew in December at the slowest pace in two years as demand for their products softened, a potential warning sign for a U.S. economy that’s been running close to full tilt for the past year.

The Institute for Supply Management said its manufacturing index fell to 54.1% last month from 59.3%. Economists surveyed by MarketWatch had forecast the index to fall to just 57%.

The last time the index has fallen more steeply was in October 2008, at the height of a U.S. financial crisis sparked by the failure of Lehman Brothers, and in 2001 after the terrorist attack in September.

The index had hovered near 60 for the past year and a half before dropping off in December.