Debt-service ratio drops, risks rise. Morgan Stanley warns of stock market rally ending; options markets remain optimistic, potentially overlooking risks.

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The debt-service coverage ratio, a measure of financial health, has dropped significantly over the past year, indicating increased risk among leveraged loan companies. Morgan Stanley’s Chief Investment Officer warns that if corporate profits disappoint, the stock market rally could end. Options markets show extreme optimism, suggesting investors may be overlooking potential risks.

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