With stocks erasing their early-day losses and the VIX tumbling once again, CNBC - the go-to resource for retirees and other retail investors - was back to reassuring investors that this month's explosion of volatility was just another dip deserving to be bought.
But Embark Capital CIO Peter Toogood offered an important counterpoint during an appearance this morning where he warned his audience against exactly this kind of credulousness by ignoring the fundamental growth global growth story that seemingly every other portfolio manager has been relying on and instead pointing to one simple fact: "Everybody is already invested".
But even with positioning stretched to such an exaggerated degree, that doesn't necessarily mean a crash is right around the corner. Instead, Toogood foresees a "step bear market" that will continue until the PPT, newly reconstituted under the leadership of Jerome Powell, realizes that they must once again intervene...because with so much systemic debt and myriad other risks - like the dangerously underfunded pensions that we've highlighted again and again - a sustained selloff would be far too risky to countenance.
"I noticed Dudley the other day say 'this is small potatoes' and warning investors not to worry about it. And I would accept that's all true, if everybody wasn't already invested. And I want to know who the marginal buyer of this story is. Everyone is in. Look at consumer sentiment surveys, loo at professional money managers, everyone is in. So who's the buyer? It's very 2007-2008."
He added that hedge fund managers are now "sitting around scratching their heads" because even European high yield bonds - the debt of some of the worst companies on Earth - are yielding a staggeringly low 2%.
Toogood also pointed out that stocks are breaking through important technical levels...
"You're breaking some very major levels in most markets outside of the US still, and that is very, very significant. That is the test of where you'd think a bear market is coming; I still do, just on valuation alone. I think this market is nuts," Toogood said.
Which is leaving asset managers in a bind...
"It's one of those extremely unpleasant moments when people need income but income is expensive and that's the other problem we see … We are forced into high yield (bonds) and we don't want to be there," Toogood said.'
Indeed, just on valuations alone, "I think this market's nuts," Toogood said.