Wall of Worry

Dave Collum's 2016 Year In Review - "And Then Things Got Really Weird..."

"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."

The Most Hated Asset On The Planet

"I know any suggestion of gold rising and stocks declining seems absurd. After all, gold is probably the most hated asset class on the planet with stocks being the most loved. Yet somehow that doesn’t bring me much comfort as I am pretty sure last year the bulls were extremely confident the Fed hike wouldn’t derail the budding recovery. The fact they are even more confident today doesn’t bring me any solace..."

"Too Slow, Too Reluctant" - JPM Finds Most Investors Missed The "Trump Trade"

The majority of JPMorgan's institutional clients have been either too slow or too reluctant to jump into the Trump trade post November 8th. Their reluctance stems from a general belief that markets are getting ahead of themselves and from a general dismissal of the idea that Trump represents a game changer for markets.

"What If Market Consensus Is Wrong" - A Hedge Fund Ponders The Alternative

"What if consensus is wrong: what if rates are rising due to the end of Quantitative Easing and not because of reflation/escape velocity on growth? Rates then rise without growth, perhaps even without much inflation. Indeed, rates started rising back in August, on momentous shifts in policy by BoJ (forced by capacity constraints and collateral damage). Such scenario is not good for equities, contrary to what currently believed by markets."

5 Charts For Fully Invested Bears

“The funny thing is there is a disconnect between what investors are saying and what they are doing. No one thinks all the problems the global financial crisis revealed have been healed. But when you have an equity rally like you’ve seen for the past four or five years, then everybody has had to participate to some extent. What you’ve had are fully invested bears.”

Norway's Largest Bank Is Going Long VIX For The First Time: "We See Much More That Can Drag The Market Down"

“We see much more that can drag the market down than we see positive surprises. We can’t see where they could come from. It’s not yet like 1999 as far as valuation goes, but there are indications of a bubble. Now we’ve emptied the six shooter in all areas - the rate is zero, a lot of QE, pricing is up and growth is the same - it’s more challenging now.”

Just 3 Charts

As the cracks in the vineer of central bank omnipotence grow ever wider, some brief reflection on the following three charts may awaken some 'animal' spirits of a different sort as the gap between fundamental reality and 'market' perception has never been wider...

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?