“The recent buildup is not in itself problematic or evidence of a substantive change in usage of leverage.”
And then… and then you bought the dip.
“For the first time since 2011, hopes for double-digit growth in U.S. earnings aren’t a fantasy [because] Wall Street analysts have been standing firm on forecasts.”
It’s quiet out there. Well, except for that whole UK officially leaving the EU thing. As outlined earlier this morning, Theresa May will make the UK’s split with the EU official on Wednesday, sealing the economic fate (literally, as they’ll be a hand delivered letter involved) of the British people and very possibly relegating the…
“Decide questions for yourself like whether global growth is expanding or not? At the end of the day is there likely to be additional or less quantitative easing pumped into the system? Are sovereign wealth funds apt to continue to increase their commitment to global equities or go back to sovereign debt coupon clipping?”
“Just as the Federal Reserve is finally taking the plunge, and as a new wave of politicians in the US and Europe look bent on redefining anything from haircuts and dress codes to the pillars of the Western liberal order, any talk of ‘mean reversion’ seems a bit out of sync.”
“We’ve come too far, there’s too much to lose!”
“And don’t let anyone try to tell you that stock-market pullbacks, including modest ones, are something investors and policy makers can now handle with aplomb. You can calculate financial-conditions indices with all sorts of back-fitted weightings but when stocks go down, everyone still goes into “The sky is falling” mode.”
Sometimes all you can do is throw up your hands and laugh.
Last week in “How To Exploit The Passive Herd With One Simple Strategy,” we highlighted some interesting commentary from Bloomberg contributor Cameron Crise who noted that since passive models are forced by … well… by the fact that they’re model-driven, to rebalance at predictable times, there will invariably be opportunities to trade off that rebalancing. More specifically, Crise…
“There is plenty to be bearish about. Equity valuations are tortuously high, with median valuations in the US and Europe near or at record highs, particularly once debt is included.”
“What are the asset pricing implications of what happened on Friday?”
Well, the dollar is under pressure on Monday, just as we said it would be on Sunday evening. The Bloomberg Dollar Spot Index fell as traders digested the failure of the GOP health care bill on Friday. This is the index’s eighth drop in the last nine days, and as Bloomberg notes this morning, “further losses of…
“Traders have lost confidence in their ability to interpret what’s plainly market-moving news. Far from hoping to be the first to trade, they need someone else to commit and help create the narrative.”
Last week, the narrative cracked. To be sure, anyone who pays attention to this sh*t on a daily basis already knew that the whole reflation meme that’s propped up stocks since the election had come under pressure on several occasions in 2017. Most notably i) the Friday before Trump’s speech to Congress when 10Y yields…