Wall of Worry

Germans Furious After Bundesbank Demands People Work Until Age 69

There's something rotten in Denmark's neighbor. Amid rising islamic terror incidents, Merkel denies any link to her immigration policies... but the government suggests the citizenry arm itself and stash 10 days worth of food and water "in case of attack or emergency," and now, despite constant proclamations of Germany's economy at the heart of European economic 'strength', the Bundesbank is calling for people to work until they are 69 (up from the current retirement age of 62)... and neither the government nor the people are happy.

"The Most Difficult, Treacherous Year" - What The Market Wall Of Worry Looked Like In 2016

2016 has been according to one buysider, "the most difficult, treacherous year" for the hedge fund community in recent history as a result of unprecedented shifts in market sentiment, choppy trading, low conviction, investor redemptions, illiquidity and  volatility month after month, which has left the hedge fund community exhausted and reeling even as the S&P hits all time highs.

VIX And Junk Bond Spreads Are Out Of Whack

The question that needs to be answered is will it normalize because investors (and The ECB) bid up high yield bonds or because the complacency in the stock market erodes away?

Weekend Reading: Central Banks Save The World

For now, Central Banks have seemingly accomplished the rescue of the entire global financial system by one again lofting asset prices higher. The problem, however, remains the underlying fundamental issues of weak earnings, slowing economic growth and a collapsing Chinese economy. There is a point, unknown to anyone currently, where the failure of monetary policy will occur.

The Last Castle To Fall: Can The Narratives Behind The S&P's Resilience Be Sustained

In the last few years, several markets/asset classes have shown signs of weakness, if not outright implosion: EU banks, EU stocks, Base Metals, Energy Commodities, Japan stocks, EM stocks and currencies. The bubble built in them by the excess liquidity provided by Central banks, as they were busy fighting structural deflationary trends (and crowding the private sector out of bonds), has deflated in most parts of the market, except two: US equity and G10 Real Estate.

David Stockman Warns "Get Out Of The Casino!"

Forget the "wall of worry," former Reagan OMB Director David Stockman warns a shocked CNBC anchorette that "the frogs are in the boiling water again on Wall Street...and they don't have enough sense to get out." The last 600 days of range-bound trading marks the top he explains adding that "we have reached the cyclical top in both GDP and earnings," which leaves a market trading at extremely expensive levels - "why would you stay in?" Stockman believes that the world economy is heading into a "deep and lasting deflationary recession." There is no evidence that America is immune, he adds, warning of the potential for 40% downside and just 2% upside in stocks...

Why Is The Stock Market So Strong?

Although money supply growth remains historically strong and investors are desperately chasing returns in today’s ZIRP world and are therefore evidently prepared to take much greater risks than they otherwise would, an extremely overvalued market is always highly vulnerable to a change in perceptions. In a sense the rebound may actually turn out to be self-defeating, as it will increase the Fed’s willingness resume tightening policy.

Goldman Says To Sell Risk Assets, Go To Cash Ahead Of "Expected Elevated Volatility"

The latest to join in the skepticism rally is none other than Goldman Sachs strategist Christian Mueller-Glissmann who in the latest "Global Opportunity Asset Locator" report, writes that the "relief rally across risky assets might fade over the near term", warns that "sharp declines in oil prices are likely to weigh on risky assets again", suggests to go to "reduce risk allocation", warns against holding US HY bonds as "the risk/reward is least favourable if oil prices reverse course" and "go to cash" ahead of "expected elevated volatility."

According To SocGen The Problem Is Not "China", It's This

"... after four long years without any profits growth, the risk is that MSCI World mean-reverts to its original 2011 PE multiple, which would imply a further 50% decline from here. Even decline back to average would imply a 15% drop."