Well, either Mark Cudmore was already drunk when he wrote his Friday missive, or he just gave us a throw away post, because what you’ll read below is about as absurd (not to mention superficial) a take on markets as you’re going to get.
It’s got it all: 1) can’t, by definition, spot black swans so no reason to hedge against them, 2) all kinds of “don’t worry about anything be happy” language, 3) a Bernanke-ish “no signs of a bubble” bit, 4) a prediction that Marine Le Pen can’t win the French presidency.
Hard to believe this is from the same guy who just 48 hours ago correctly surmised that the Fed hike would lead to lower yields and implicitly said the world is still trapped in the deflationary doldrums.
But maybe I’m just bitter. After all, Cudmore is an Irishman, which means he’ll be even drunker than the rest of us today. And by “us” I mean you. Without me. Because as regular readers know, I can’t drink or my pancreas may go on strike only this time, permanently. So f*ck you. I’m jealous. But I’ll take my espresso and cigars.
More from Cudmore below.
Via Bloomberg
Most global asset markets are on a tear this year, which has many investors fretting about abundant complacency. The fact is, that despite recent gains, there are no good reasons to worry right now.
- The long-term successful trader will be paranoid by default, and that is fair. There’s only so much you can do to prepare for black swan events
- Some portfolio insurance is always sensible. But this was the week of major event risks and we’re through the other side. That means that no investor should be positioning for imminent and sustained risk aversion as their base case
- Many asset classes may be “expensive” but few, if any, are showing signs of a bubble. And the global macro environment is exceptionally supportive
- The Fed has made clear it wants to keep monetary policy accommodative. Expectations for Trump’s economic stimulus are now so low that further disappointment there won’t collapse sentiment
- The result of the Dutch vote should reassure investors that the populist outcome is not guaranteed to surprise at every political election. The French risk hasn’t gone away, but we should have more faith in the repeated polls that suggest Le Pen won’t win the presidency
- China will be focused on growth until the political reshuffle in October. We’ve also had almost nine months to adjust to Brexit
- Global growth is accelerating. Liquidity remains abundant. Beyond U.S. equities, the vast majority of assets don’t look particularly stretched on a historical basis
- I’m not arguing that assets can’t fall. But it’s hard to see a sustained period of risk aversion commencing anytime soon. Complacency is never advisable, but if ever there was a time for traders to briefly lower their guard, it’s this St. Patrick’s Day
