‘Little Wonder Everyone Buys The Dip’
"Our view, negative returns for stocks and credit in the second half," BofA's Michael Hartnett reiterated, in the latest edition of the bank's weekly "Flow Show" series.
This was a good week for those inclined to suggest the "house of cards" (as equities are often characterized) is poised to collapse. The rally ran up against a veritable laundry list of terrifying headlines.
Of course, critics have spent the last dozen years calling stocks a wobbly Jenga tower -- a castle in the sky, built on
Stonks go up
Simplistically, if you think the primary and proximate cause of the current fear and weakness is Delta, and you think this Delta surge will peak and subside like the previous surges, then you’ll BTD when you think “peak Delta” is starting to peek over the near-term horizon.
With new case curves starting to round over in some of the worst hit states (TX LA CA etc) and hinting at rounding for the US as a whole, something is peeking.
True, all the other risks, dislocations, excesses still remain. We’re feeling our way from early stage to mid cycle. A big slug of fiscal stimulus will be withdrawn in mere weeks, and monetary stimulus will start easing off in mere months.
So you might well BTD less or differently than before, but some sort of BTD makes sense.