Beware The Dead Cat Bounce: “Exuberant Markets Can’t Escape The Shadow Of Negatives”

Tuesday, August 15, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Aug 15, 2017

Treasury yields have erased the knee-jerk losses from retail sales, Nasdaq is now tumbling, and gold is bouncing…

This is not the market we saw yesterday that was relieved that the world had not ended and Bloomberg’s macro strategist Mark Cudmore is worried that it’s not over, warning that “exuberant markets can’t escape the shadow of negatives”

Via Bloomberg,

Risk assets have rallied sharply so far this week but there are sufficient flaws in the positive narrative to argue that the bears will likely inflict further pain on impatient bulls. On Monday, the S&P 500 Index had its best day in more than three months. With U.S. stocks the flagship risk asset, that good mood has spread across markets. I argued a week ago that the global market outlook had turned much more negative, so the strength of the (expected) bounce has taken me by surprise.

To my mind, the facts still lean significantly bearish and suggest the phase of broad risk aversion isn’t yet done:

Leverage amid low volatility is one of the primary risks. A sustained pick-up in volatility will force risk reduction. While the VIX Index has dropped from Friday’s nine-month high, its 10-day moving average is now at the highest level in more than three months and is virtually assured of continuing to climb the rest of this week — that will matter.

The Rest…HERE

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