Blackrock investment institute on what they are referring to as the downdraft in stocks
- Says stock swoon is contained but was driven by unwinding popular trades that bet on low-volatility
- Equity pullback is 'an opportunity to add to risk assets' such as emerging market stocks
- A real market regime change would require 'a deterioration in the economy' and accompanied by increase in macro volatility
- Leveraged investment products tied to low volatility 'magnified a downdraft' that stemmed from investor jitters
Inverse and leveraged products 'are not liquid' and 'lack essential elements of valuation clarity and access'
Has anyone heard from Taleb on sellers of volatility? Or is he too busy laughing his head off?
ps. Just on:
- Inverse and leveraged products 'are not liquid'
Ummm, yeah.
Does anyone recall the huge GBP drop during early Asia (Australian and NZ markets only open at the time). A complete vanishing in liquidity in GBP! Which is hardly a low liquidity trading instrument. It can happen anywhere ...
More from the rockers;
- Says recently enacted US tax overhaul and higher govt spending could add 0.8 pct pt to u.s. GDP growth in 2018
- Expanding US growth could shorten market cycle expiration date to 2 or 3 yrs
- Sees 'yields rising modestly from here' and prefers equities over fixed income
