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Short Side of Long...Asset Prices are about to correct
1. Every single asset is at least 2 standard deviations above its 50 day bollinger band 2. Every single asset has its relative strength index (RSI) above 70 3. Every single asset has been gaping upwards and lately moving in vertical fashion
I would be nice if said "expert" proves prescient. Junk corporates - HYG and JNK - not overbought not and on his list. Yet, various junk bond indexes are at all time historic highs ala the Merrill Lynch High Yield Master II Index. I would think/hope a sizable correction in the Treasuries would see money flowing to high yield. But oil and equities have to also cooperate.
I would definitely agree that something has to give between treasuries and risk assets, but who knows which will give in first. Short term- I would agree that some corrections are in order.
With that said, maybe the paradigm is adjusting to where the US looks relatively great compared to the rest of the world. Maybe that can fuel bull markets. Let's remember that US stocks and Junk Bonds have been flat for the past year +.
"It has come to my attention that variety (sic) of global macro asset classes have become overbought, over-extended and prone to a correction". That's just too funny! What hole has he been hiding in?
Overbought? or (rather) Distorted? - a consequence of lingering '08-'09 fallout, ridiculously low rates and a great deal of political/economic uncertainty. For sure this is a period of great uncertainty. But I'm not convinced the answer is to pile all your money into near 0% cash or 10-year Treasuries (yielding 1.4% before expenses). As for shorting markets, I'll leave it to others to discuss the serious pitfalls.
Writer doesn't appear to state just when he expects all these markets to correct. And people are paying him for this type of open-ended prophecy? (does look like he can afford better vacations than we can) - Lost a few % last year while averaging into energy & commodity-heavy funds. More than made that up this year as those holdings rebounded nicely. Very good year so far. I'll avoid the spitting contests observed lately.
Comments
With that said, maybe the paradigm is adjusting to where the US looks relatively great compared to the rest of the world. Maybe that can fuel bull markets. Let's remember that US stocks and Junk Bonds have been flat for the past year +.
Overbought? or (rather) Distorted? - a consequence of lingering '08-'09 fallout, ridiculously low rates and a great deal of political/economic uncertainty. For sure this is a period of great uncertainty. But I'm not convinced the answer is to pile all your money into near 0% cash or 10-year Treasuries (yielding 1.4% before expenses). As for shorting markets, I'll leave it to others to discuss the serious pitfalls.
Writer doesn't appear to state just when he expects all these markets to correct. And people are paying him for this type of open-ended prophecy? (does look like he can afford better vacations than we can
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Lost a few % last year while averaging into energy & commodity-heavy funds. More than made that up this year as those holdings rebounded nicely. Very good year so far. I'll avoid the spitting contests observed lately.
Regards
Pending capital assets rules change.
http://www.bloomberg.com/news/articles/2016-07-06/junk-seen-enticing-yield-hungry-insurers-as-capital-rules-shift