Consider Yourself Warned on Market Risks
We’ve just witnessed a shot across the bow.
Photographer: Bloomberg Creative Photos/Bloomberg Creative CollectionThis article is for subscribers only.
It was nice to see equity markets on firmer footing this morning. But as things have since unraveled a bit, in truth, we’re witnessing a shot across the bow. It’s a warning for a US equity market that’s still largely priced for perfection and positioned for a soft landing.
The problem is, this cycle could end in a recession in the next several months. It’s not necessarily the most likely case, but it’s a growing risk and one investors are coming to terms with. And yet, while the air pocket we just experienced in the relentless rise of US equities is behind us, the causes of it — excessive risk-taking because of low volatility — isn’t.