December 14 2018

Headless Chickens

Running like a headless chicken perfectly summarizes the state of senseless directions that the equity markets are taking right now.

Even the presumably smart market gurus were wrong-footed. Jeff Gundlach, Bill Gross, Jamie Dimon all predicted interests to shoot up through the roof, as inflation was expected to go on a rampage.

Fair to say that the cooling down of Chinese growth triggered by trade bickering is advocating in favour of an opposite scenario. Again, people are left wondering whether this is the early start of the recession, and whether they should continue to push down the accelerator or slam the breaks.

Well, you’ve seen it before, and plenty of times: Suppose the building you are in is on fire and smoke is filling the room, what do you do? Answer A: you reach for the nearest exit in good order, Answer B: you go back to your desk to fetch your favourite key-holder because you can’t possibly leave without it.

Translated back into market terms, when 2-year US treasuries are offering a riskless 2.7% return, you increase your cash position. Thus, you’ll save a bit more to afford another favourite key-holder.

360 Advisory – Markets