‘Duration Frustration’ Seen As Defining Market Feature
"Investors need to manage explicit or implicit duration risk from income-generating assets and strategies," Goldman's Christian Mueller-Glissman wrote, in a new asset allocation piece that featured a section on "duration frustration."
Time and again over the last several months I've highlighted a veritable chorus of warnings on the potentially perilous juxtaposition between a market with a ton of embedded duration risk and the transition to a new macro regime defined by run-it-hot policies and
Mr. Broken Record here remains astonished that most analysts now totally ignore the risk of a Covid Comeback.
Thanks to Fox Nation, vaccine take-up rates remain much too low in many areas to squelch the disease.
Maybe b/c if it does, it’ll be treated as an irritant, like the flu, rather than a deadly disease worth sacrificing the economy (and plenty of other things) to protect ourselves from it?
NB: The above is just a guess, not a solid prediction. I got my first jab and can’t wait until I get my second injection.
Are you saying that despite numerous voting depressive state laws now being enacted that the Republicans may be unable to get re-elected because they may die off as the unvaccinated from the pandemic?
From your keyboard to God’s ears.
Nice re-review of duration.
[quote]”the beta of secular growth stocks like those on the Nasdaq might remain more negative since last year as embedded LT growth expectations are already high and unlikely to pick up with cyclical growth and inflation.”[/quote]
Personally, I think this is the greater risk. You can argue that growth stocks were “priced for perfection” in Jan-February, with LT growth expectations running high. The drawdown may be motivated by rising rates – rising rates being not perfection – but it’d make more narrative sense, IMHO, to argue that in a macro environment where other businesses are finally offering a chance of returning something, traders looked at anticipated growth needed to justify tech valuations and said “hm. maybe airline/cruise companies offer better risk reward, going forward”.
I know a hf manager that had sold ZM at less than $200 in 2020 after buying it well below $100. At least outwardly, he argued he wasn’t mad at the stock then going on to top $400. In his view, above $200, there were stocks with better risk reward profile than ZM…