"The current run of active manager underperformance began shortly after the onset of QE. Equity market dispersion and volatility have remained stubbornly low throughout QE and served as headwinds for manager performance." - Goldman
"You know what’s so tragic about America? Despite all of the wars our nation gets involved in, we’re secretly one of the most peaceful cultures on the planet... We’ve been voting for peace for nearly 20 years now, and all we get is war. That should really tell you something. It should tell you that our system doesn’t care about what the president stands for, or what the voters want."
"The rise in return correlations occurred almost exactly at the time when the central banks effectively ‘took over’ markets. However, with the Fed now tightening faster than the market anticipated not long ago, and our economists expecting that it will cease to reinvest maturing securities in its portfolio from December this year, the unwind is underway."
In the 1990s, stocks continued to rise relentlessly for years, even after then Fed Chair Greenspan warned of irrational exuberance in late 1996. Last decade, the rally in home prices continued as ever more people appeared convinced that home prices never fall. This time around, we are eight years into a bull market. As in those times, investors have all but given up betting against conventional wisdom...but this time is not different...
While CDS markets had largely priced in a downgrade (with levels approaching those of Brazl), FX markets seemed surprised when moments ago S&P downgraded South Africa to junk, cutting it from BBB- to BB+, in the aftermath of last week's sacking of finance minister Gordhan by president Zuma.
The key economic releases in the US this week are ISM manufacturing on Monday, ISM non-manufacturing on Wednesday, and the employment report on Friday. The minutes of the March FOMC meeting will be released on Wednesday, while several Fed officials are scheduled to speak this week. The meeting between Trump and Xi set for Thursday and Friday at Mar-A-Lago will likely attract significant attention.
"Unless we change the fundamental structure of the economy so that actually producing goods and services and hiring people is more profitable than playing financial games with phantom assets, the end-game of financialization is financial collapse."
The Russian Central Bank surprised markets when it unexpectedly cut interest rates by 25 bps to 9.75% (30 economists expected no change, 8 predicted a 25 bps cut), its first rate cut in four meetings or 7 months, as inflation, which has dropped from a peak of 17% to just 4.6% last month, appears to be under control.