This May Be “The Scariest Chart” In The World

Were you looking for another reason to be wary of US equities?

And by “another reason” I mean in addition to ridiculous multiples, the growing disconnect between stocks and the flattening yield curve, the fact that a handful of names are responsible for a historically disproportionate percentage of the YTD return, the possibility that a sudden spike in the VIX could trigger a harrowing unwind in systematic strats that have levered up thanks to artificially suppressed vol., etc. etc.

Well look no further, because Citi has one for you. This weekend, the bank is out with its “June 2017 chart of the month” and it does indeed look scary.

You can find the visual and some brief color below. Do with it as will which, if recent history is any guide, means “look at it, forget it, and keep buying“…

Via Citi

In some respects, one of the scariest charts to look at currently is the number of announced mergers & acquisition deals over the past year or two.

M&A lawyers argue the “uncertainty” factor, which has come about recently, given some unpredictable aspects of the new Trump administration, has been the issue. It only may explain the last six months, but the trend has been poor for about two years or more. In the past, there has been some correlation with the S&P 500 and thus it could generate more legitimate fears than some of the other excuses that are put forth for not wanting to buy American equities.

MAS&P

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2 thoughts on “This May Be “The Scariest Chart” In The World

  1. What about a similar significant drop in M&A in the early 2014 time period without a corresponding drop in the S&P 500? There seems to be an overall correlation, but ….. don’t we need to see the S&P 500 drop, or at least a topping, before we say a correction is imminent? If we get a Black Swan event, such as Comey testifying on Thursday that he considered Trump’s appeals to go easy on Flynn to be a pretty clear Obstruction of Justice attempt, the S&P 500 may ignore the M&A drop for quite awhile as it did in 2014.

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  2. Pingback: Trotz Trump-Risiko: US-Firmen bleiben (noch) cool | Aktuelle Nachrichten

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