The last few weeks have seen some modest volatility return to the US equity markets (a 5% high-to-low correction) sparking 'markets-in-turmoil' discussions as Fed Taper and Abenomics-Anxiety makes the headlines. But with today's payroll print and a comfort-blanket of stock-and-options quote-stuffing, fed-liquidity-providing momentum, today's rally will allow us all to sleep well over the weekend. However, one look at the following charts should suggest that things have changed... the most successful (momo-driven) trades around the world are coming undone in a hurry as the fear of a slowing of the global liquidity 'flow' rises - and the US equity investor is not immune...
The 'cause' - among others - is the carry-trade (JPY)...
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So - we borrow cheap and then have two choices... use that levered cash to chase return or earn a better yield... neither are working now...
Buy What's Working... The damage to equity markets...
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Reach For Yield... The damamge to yield-providing markets...
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Charts: Bloomberg