“Even Wells Fargo gets it.”
And that’s when you know you’re in trouble.
So it’s no secret that valuations are stretched. Have a look at an updated version of Goldman’s median stock valuations table which is always good for a laugh:
See, there? What could go wrong?
Well, maybe nothing. But there’s probably not a whole lot that can go right either, according to Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute, who is exercising something most investors have forgotten the meaning of: common sense.
The thing is, with valuations as stretched as they are, and with Janet Yellen apparently intent on starting what amounts to a controlled demolition of risk asset bubbles (because remember, calling lackluster inflation “transitory” allows the Fed to avoid saying what they’re really doing, which is moving ahead with normalization because they seem to be concerned about the extent to which persisting in accommodation is inflating bubbles), it’s hard to see how stocks can continue to climb.
Of course there are all manner of caveats there, not the least of which is that no one really, in their heart of hearts, believes that central banks are going to let risk assets suffer anything that even approximates a meaningful correction, but let’s just try to pretend, for a moment, that we live in a world where two-way price action has some chance of making a comeback.
So here’s the above-mentioned Scott Wren predicting a 4-8% decline in equities by year-end on a network where saying things that like is a good way to get yourself shot (figuratively speaking):
As you can see, CNBC cut ol’ Scott off pretty quick there at the end and if you listen closely, you can here them say “alright…” before wrapping it up.
So: “alright, well that will be quite enough of that Scott, thanks for coming on and don’t ever come back.”
You’re probably thinking the same thing…
Market is burnt when the “toast side” gets it. Net Net Volatility finally.