With stocks suddenly looking quite shaky after today’s various data misses and bank revenue warning, here is a timely warning from RBC’s head of cross asset strategy, Charlie McElligott, who warns that the “best is behind us” theme remains intact with data, both ‘hard’ and ‘soft’ – kind fading from highs, driving curves flatter, and with the same ‘stalling’ is playing-out globally as well, some of the most concentrated trades are suddenly at risk.
But with volatility perhaps set to make a return, the RBC analysts has some good news: “here is where it gets interesting”, and presents some ways to trade what the inevitable unwind of the trade where the “entire world is long tech, short energy.”
From RBC’s Charlie McElligott
HOW WE GOT HERE / WHERE WE’RE GOING
The status-quo is AGAIN being perpetuated week-to-date (USTs bid / curves bull-flattening, $/Y dipping potentially on account of the massive and painful ‘PBoC engineered squeeze’ in Chinese Yuan shorts, crude fading, ‘Growth’ and ‘Defensives’ leading within equities while ‘Value’ / cyclicals and ‘Size’ / small caps are clubbed – all while S&P remains unbreakable due to ‘goldilocks’ easy conditions with lower rates and USD).
This post was published at Zero Hedge on May 31, 2017.