Markets volatility

Nomura’s McElligott Asks: ‘Could It Really Have Been That Simple?’

Gathering storm clouds notwithstanding, market participants are obliged to ponder the somewhat surreal prospect that, as apocalyptic as everything seemed in March, the pandemic plunge amounted to nothing more than a dip-buying opportunity. Don't misconstrue that as an attempt to downplay widespread economic suffering on Main Street. And certainly don't take it as an effort to trivialize the tragedy inherent in the 668,000 lives lost so far in the pandemic. Rather, the point is simply that from the perspective of someone willing to ignore the largest public health crisis in a century on the way to buying everything in sight in mid-March confident that central banks (and especially the Fed) would prop up asset prices, this was a simple trade. "Hindsight being 20/20, could it really have been that simple on the 2020 version of the 'Fed rides to the rescue' trade yet again?", Nomura's Charlie McElligott asks, in a Thursday note. "The answer seems to be a resounding 'YES'", he goes on to say, referencing the returns shown in the figure (above). If you're among those who participated in the surge, you now have an opportunity to take profits ahead of a potentially volatile August (w
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13 comments on “Nomura’s McElligott Asks: ‘Could It Really Have Been That Simple?’

  1. Goldfinga' says:

    Seems like everyone bought the bottom except for me… was so simple.

  2. Emptynester says:

    Me too.
    I will add this, too: it was only a “buy the dip” opportunity if you believe the economy/ earnings potential looks as good post- pandemic as it did pre-pandemic.

  3. joesailboat says:

    I timed it but would have done much better buying SPY. I did not believe, nor did most believe March was really the bottom. Time will tell.

  4. lorbarr says:

    I”m f’ing finally learning not to doubt the Fed and just BTFD. Which given my poor track record, suggests even the Fed may be near their limit. But with ye olde digital printing press handy, does the term “limit” even apply to the Fed?

  5. lorbarr says:

    And I”m thinking the Fed will not let both the stock market and the real economy crash at the same time. So the stock market pump will go on until the pandemic has mostly passed. Just the opposite of what most regular folks would intuit, but makes sense from the Fed’s perspective.

  6. Sophist 2020 says:

    I find it hard to believe it won’t be a buy the rumor — the Fed has our backs until the pandemic passes — and sell the news — the Fed was there until it passed. Then what?

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