“Show a little spirit and giddy up.”
As usual, the docket is full and the risks are multiplying.
“Well for me it’s no contest. Slick youtube presentations warning about Danger Ahead (that looks exactly like the Danger Behind!) are like an investor in 2007 warning about tech stocks because the 2000 DotCom crash was still ringing in their head.”
“These policies, which are also being followed by the other world central banks, will lead to disaster.”
“If you are adding to your long-term holdings of stocks and other risk assets at current market valuations, you are likely to be betting — knowingly or not — on a combination of three drivers of future returns; or you are planning to sell your holdings to someone who is or will be making that bet.”
“This is really just one manifestation of the more earthly, you can’t fight city hall. A twist in a post-vigilante world, which can’t bear not to believe that the authorities will deliver what our financial market investing thesis requires, while at the same time being utterly incompetent.”
Oh, boy. Try to wrap your head around all of this.
“I’m talking about good old fashioned two-way flow and nascent trends galore.”
“We are likely to be nearing a low point for major market bond and equity vol, and if the catalyst is policy it will likely come from positive volatility QE ‘flow effect’ being more powerful than the vol depressant ‘stock effect’.”
“And with CSPP holdings at €116bn and growing, a big ETF at that!”
“In the end, however, there may be no escape for investors”…
Simply put: if the idea is to communicate that the hawkish shift is going to be “coordinated”, market participants aren’t getting the message.
“Investors face a conundrum.”
“Stocks were being pushed higher because everything was so FUBAR’d. Central Bank balance sheet expansion was pushing risk assets higher, and for the longest time, everyone wanted to fade it.”
“The glass half-full approach. But caution, mistrust, the search for competitive advantage or outright blunders by the powers-that-be risk exacting a very steep cost. Unless, of course, all the alleged bubbles people rail about are your bread and butter.”