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Divided we fall. And the financial world is looking increasingly cleft.

The demise of Peloton’s ABS credit fund is just the latest reminder that, while equity markets sail blithely on, credit remains in turmoil.

Some argue that the divergence is a technical effect, as investor sell the CDS indices. But, says Tony Jackson in the FT, Goldman Sachs is among those who disagree. In the first three weeks of February, no CDS spreads in Europe seem to have narrowed, while the sectors hardest hit on the credit front - such as oil, basic resources and capital goods - were also those whose share prices rose most.

While the forces behind this are slightly mysterious, one fact is crystal clear. In the bull market days of credit, there was much talk of big investors integrating their equity and credit operations – of sitting the analysts together, reading across from one portfolio to another and so forth. That has all gone out of the window.

There are two options. Either credit is too cheap - though the intricacies of structured credit valuation complicate further the decision to start buying - or equities will have to adjust downwards. Which will it be and when?

It is claimed, for instance, that when the US yield curve has steepened to a given point – as happened at the turn of the year – credit markets bottom out on average six months later. In which case, the situation should be resolved by the summer.

But what if, as seems highly possible, this cycle is longer and more severe than average? If so, forced selling might spread beyond the credit funds and extend to equities.

One side is badly wrong says Jackson. If it’s credit then all well and good. If it’s equities, watch out.