Fade the Barron’s cover?
“The days when the Federal Reserve has a large bond maturity have seen abnormally large declines in the S&P 500.”
Ignore the large laser cannon, he’s just here to help!
There is suddenly an alternative.
Listen, you people are concerned about 10Y yields, and that’s fine. After all, we blew threw the February highs this week on the way to the “dreaded” 3% “pain threshold” and while there were no swarms of locusts and no Pazuzu sightings (that I’m aware of), there are still concerns that the higher we go, the closer we get to a situation characterized by “diversification desperation” or, more simply, a scenario where bonds and stocks selloff in tandem.
In essence, the same things everyone was watching last week (e.g. tech, trade, Trump) will be in focus again…
“Enjoy those chocolates.”
“Narrative of recent selloff: imminent concerns about inflation, rates, trade wars, and a growth downshift are overblown, in our view.”
“Let me describe to you where I think Jerome Powell is right now as he takes the reins at the Fed. I would liken Powell to General George Custer before the Battle of the Little Bighorn, looking down at an array of menacing warriors.”
Ahead of a “make or break” moment.
Look, I realize that pounding the table on forced unwinds by vol.-sensitive investors during the recent acute pickup in volatility is quickly becoming an exercise in dead horse beating. But…
“There had been a lot of complacency built up in markets over a long time”…