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What Fund Managers Think Is The Biggest "Tail Risk" At This Moment
With just under 80 minutes left until the Fed's decision (which may or may not have been leaked already), one would think that according to confused market professionals, the biggest tail risk facing the market is the Fed hiking or alternatively, not hiking, unless of course, both outcomes lead to a surge in stocks which at least for today's session appears to be the baseline driven almost entirely by what may be a sudden drop in the VIX as uncertainty will be removed in either case, if only for a few weeks, which in turn will push XIV higher, and cascade through the Yen carry trade pathway into the E-Mini.
And yet, is the Fed's binary decision the biggest tail risk according to market professionals? According to BofA's latest Fund Manager Survey the answer is no.
Below we show what the latest, September, response is to the question "what investors consider the biggest tail risk" as well as evolution of this answer in the three months preceding.
Curiously both #1 and #2 risks, namely "China recession" and "EM Debt Crisis", are an indirect function of the recent and ongoing surge in the dollar, which will likely be exacerbated should the Fed indeed launch its first rate hike cycle in 9 years.
So while a rate hike today has been telegraphed by the punditry as the best possible outcome, it appears to also be the biggest "tail risk" among the professional community who will not admit it directly, but are certainly concerned about the downstream effects of what such a rate hike could unleash.
September
August
July
June
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Equity bubbles? What equity bubbles?
an "equity bubble" implies that those equites are priced too high. Given that there is no price discover who the fuck knows?
Biggest tail risk?
..that we might never remove the massive corporate banking/financier schlong that is firmly implanted up our tails.
"Price discovery" now means discovering what the Fed sets prices at!
What? You mean it isn't global warming???
I read somewhere that Mohammed Hussein Obama’s final big push will be on climate change.
With Boehner and McConnel’s limp-dick acquiescence, look to see electricity prices “necessarily skyrocket”.
That will be some kind of price discovery for you.
The truth is that there are numerous useless paper-pushers and generally useless fuckers that do NOT want to have to work for a living.
Fuck em, fuck em all.
If only the CME board of directors knew where the next crisis would be, they could launch futures on the crisis nation's tradable markets, and mint money.
Where the hell are Brazil Presidential Impeachment Futures guys?
US Dollar hegemony?
gundlach, an $85 billion long bond fund manager fears a 25 bps rate increase. why? because his bonds will get smashed in principal value.
as much as i respect the man, its disheartening to hear a guy like him say its extremely bad for us to have a strong U.S. dollar.
inflation, full employment, S&P500, shanghai composite, greece, high-yield, emergning markets ... ive lost count of how many "mandates" the fed has at this point.
In other words, China & everything/everyone else, but no worries here because - well, the U.S. is still Big Dog...
Gawd, the smack-down is going absolutely clear the decks of historical record...
I think raising rates now would be tantamount to suicide for the global economy. Buy gold an doil [both undervlaued] and avoid overvalued items like RE, stawks, etc
Ok, that will cost everyone here $5.00. My advice ain't cheap!