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In late September I wrote a blog titled “Something Is Going To Break”. The premise was that if the Fed didn’t start to ease up soon something would break. With the failure of the crypto exchange FTX, it’s starting to happen. In retrospect, it’s no surprise that crypto would be the first to crack.

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But it’s not just FTX and crypto. Smaller but previously beloved growth stocks are starting to look like zeroes. The two I’m thinking of are Carvana (CVNA) and Upstart (UPST).

While the markets can survive the failure of FTX CVNA and UPST the point is that if the Fed continues its maniacal rate hiking bigger and more important entities will come under pressure as well. Of course, smaller and weaker companies will succumb first. They are canaries in the coal mine. As financial conditions become tighter and tighter bigger and more important players are at risk as well.

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