Economics
Stock Investors Torn as Defensive Bets Go ‘Absolutely Parabolic’
- Dovish monetary bets and cycle angst spur valuation extremes
- Hedge funds adds shorts to expensive rate-sensitive companies
This article is for subscribers only.
Jerome Powell and his colleagues are stoking U.S. stocks to fresh records, but they’re also sharpening the valuation dilemma confronting investors the world over.
The prospect of easier monetary policy is adding fuel to a mammoth rally in bond proxy shares like real estate companies and utilities. Investors betting on a growth slowdown are ramping up premiums for U.S. defensive stocks to the most in six years, as high-quality equities in Europe also notch fresh records. Companies that post reliable earnings -- growth stocks -- are at a two-decade high versus value shares.