One Trader Warns “Many Assets Are Ripe For A Correction” & Korea Is The Excuse To Sell

Wednesday, July 5, 2017
By Paul Martin

by Tyler Durden
Jul 5, 2017

With Emerging Market bonds suffering sudden and large outflows (after reaching record low levels of risk), IPOs collapsing, and ‘no brainer’ FANG stocks unable to keep a bid, it appears – despite the hype of a 30-component-index heavily weighted towards financials being near its record highs – that all is not well in the “buy everything.. especially the highest beta crap” investing world in which traders have become so used to existing.

As former FX trader Mark Cudmore notes North Korea could be just the excuse that anxious buy-and-holders need for a period of risk aversion…

Via Bloomberg,

Many risk assets are ripe for a correction from elevated levels and North Korea’s latest provocation provides sufficient excuse for traders to act.

North Korea’s missile tests have been ignored all year, so why is this time different?

Partially because diplomatic solutions are making no progress and so a U.S. military response is becoming more likely.

But, more importantly, it’s raising tensions between China and the U.S.

That latter point is far more critical in the immediate-term.

It comes just ahead of a G-20 that was already expected to be fractious, and in the context of potential U.S.-imposed metal tariffs triggering a trade spat.

Most equity markets are trading close to record highs, but there are suddenly signs of vulnerability: bellwether tech stocks in the U.S. and Asia are getting hurt, while risk-parity strategies are also suffering a setback after a strong run.

The Rest…HERE

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