The market is fake.
But you already knew that, right? I mean God, I hope you did. Because at this point, there’s only one acceptable excuse for participating in this madness and it goes something like this: “I realize this is a ‘greater fool’ trade and I am convinced that I’m not the last fool in the chain.”
Goldman is out with their weekly GOAL kickstart note and if you look out across assets, the valuations are beyond absurd. Again, you should already know this, but it bears repeating because invariably, someone will read this who doesn’t fully appreciate just how far afield we are.
Here are equity valuations globally broken down by style and sector and also by DM versus EM:
And here’s a look at DM bond yields which, as you can see, are more than 1 standard deviation expensive even after rising last month:
As for credit, well, it’s the most bubblicious of all:
There’s really only one way to describe all of that – cue Donnie:
Bill Gross agrees. “I think we have fake markets,” the former “Bond King” said at a Janus Henderson event on Monday, before driving his point home as follows:
Even China and South Korea – perfect examples of the risk trade – are at very narrow (corporate spread) levels. There is no real advantage in the global marketplace. Everything is so tight, it is hard to pick a winner from a group that is fake.