Credit Disagrees With U.S. Stocks (Again): Who’s Right?
Spoiler alert…
Spoiler alert…
“…re-risking is likely to continue during the summer as volatility stays contained and investors increase equity positions.”
It was the second-most crowded position on the planet after all.
Hint: it’s the normalization of U.S. equity volatility.
“…like in the case of an aging human, where weakened defenses and impaired resilience cause it to succumb to infections and other exogenous threats, the main street economy is exceedingly vulnerable.”
Make domestic equities volatility again. #MDEVA
And so the debate continues.
…one question worth asking going forward is what happens when these two distinct types of risk-off events collide?
“Enjoy those chocolates.”
“As Narrative abstractions — cartoons — become our short-hand for things that used to have meaning, our models become more and more untethered from the reality they seek to reproduce.”
“In the last week of January, as equities went on yet another run, a client who had been waiting to buy the dip called us with an exasperated query.”
Marko Kolanovic – a.k.a. “Gandalf”, a.k.a. the “half-man, half-God” – has a new note out and it’s great.
No conspiracy theory about Janet Yellen playing futures trader from her living room necessary.
“I’m a little bit more fatalistic. You know, we have come to accept that financial markets are driven by people and by policies and by personalities. And, what is Chairman Powell going to do? What will President Trump tweet next? As if they were in charge. Well perhaps sometimes they are not in charge.”
Days like today are always amusing to the extent they bring out the Don Quixote in people.
So basically, Ben just said that the only thing he can think of off the top of his head that would be worse for financial markets than Trump starting a trade war would be if the plot of “Seeking A Friend For The End Of The World” became reality.
“But it doesn’t work. Or at least it doesn’t work anymore.”
And so we close the book on February.
“The Donald seems to think that the 37% gain in the stock market between election day and the January 26th high was all about him, and in one sense that’s true. Donald Trump is all about delusional and so are the casino punters.”
Let me tell you something about the whole “when do higher yields start to weigh on equity prices?” debate: it’s a dead horse and everyone is going to continue to beat it mercilessly.Â
“In fact, the opposite happened during February’s correction.”
Gandalf. Need more Gandalf.
If you try hard enough, I have no doubt you can find plenty of confirmation bias in there to support your penchant for loading up some more headed into the weekend.
“…when you look at any given day or week, you see what appear to be odd-ball circumstances.”
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