Maybe you heard and maybe you didn’t, but Goldman’s got themselves some trade ideas for 2018 they want to tell you about, ok?
Something tells me that if we do get a truly meaningful selloff in HY and/or EM credit, this is going to be the only thing anyone is talking about.
Here’s something else to worry about.
“Fragile Five” and “an alternative version of monetary policy reality.”
“Clarity around the next Fed chair, and hence the rate path, should provide a boost to global assets, particularly emerging markets.”
“Successful trading depends on a delicate balancing act between confidence and fear. If you stray off the path, it’s best to take a few minutes to get your bearings before rushing headlong again.”
And the punchline: if that plays out, there’s only one thing to do…
What could go wrong?
“As always, keep one eye on left field for the “unknown unknown” that could shift the market’s thinking.”
“The difference this time is that those macro pressures are being combined with a broad array of idiosyncratic negatives.”
Dollar bears on the back foot all of the sudden…
Sustainable? Probably not.
“Can’t be distracted with what’s goin’ on with the war, or what’s wrong with the economy – stop worrying about that!”…
Let the bull market do its job.
So one hopes investors are cognizant of the possibility that they are chasing an EM FX rally more than they are “investing” in emerging markets with this trade.
That’s all fine and good and we wish anyone who’s still in this trade the best, but…