{"id":1434425,"date":"2023-10-23T19:00:00","date_gmt":"2023-10-23T23:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1434425"},"modified":"2023-10-23T19:00:00","modified_gmt":"2023-10-23T23:00:00","slug":"retail-getting-the-message-stocks-bonds-can-fall-together","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/retail-getting-the-message-stocks-bonds-can-fall-together\/1434425\/","title":{"rendered":"Retail Getting The Message Stocks & Bonds Can Fall Together"},"content":{"rendered":"

Retail Getting The Message Stocks & Bonds Can Fall Together<\/span><\/p>\n

\n

Authored by Simon White, Bloomberg macro strategist,<\/em><\/p>\n

Retail seems unfazed by the tension in the Middle East, according to stock sentiment,<\/strong> while they have continued to add to their bond positions despite rising yields.<\/p>\n

That will become increasingly uncomfortable as both stocks and bonds falling at the same time becomes a more common occurrence.<\/p>\n

The recent period is a reminder that when the stock-bond correlation is positive<\/strong>…<\/p>\n

<\/a><\/p>\n

…both assets can fall at the same time.<\/strong><\/p>\n

<\/a><\/p>\n

That might come as a shock to retail investors. <\/strong><\/p>\n

They have been net bullish for most of the second half of this year, according to the American Association of Individual Investors (AAII).<\/p>\n

Further, they have increased their net bullishness in the last 2-3 weeks despite the situation in Israel and Gaza.<\/strong><\/p>\n

<\/a><\/p>\n

The stock outlook from a technical stand point has soured in recent weeks, even while there is a\u00a0cyclical upswing\u00a0in the US and global economy. <\/strong>Measures of breadth – such as the number of stocks trading below their 200-day moving average, the number of stocks making new 52-week lows, and the advance-decline line – are all weakening, but are not yet at capitulatory levels that would hint a rebound is imminent.<\/p>\n

Moreover, the S&P has dropped through its 200-day moving average, so we may see more follow-through in the short term.<\/strong><\/p>\n

Excess liquidity, though, remains supportive for risk assets in the medium term, and as long as yields do not continue to accelerate higher (more dip buyers coming through perhaps), stock-market downside should be contained. (Note as well though the Nasdaq has a lot more downside than the S&P, being up 33% this year, versus 10% for the S&P.)<\/p>\n

While retail may thus face more stock losses, they have also had their hands bloodied by trying to catch the falling bond knife this year. <\/strong><\/p>\n

Using ETF flows as a proxy, they likely accelerated their net purchases of government bonds in the summer as yield rises started to pick up, and have chased prices lower ever since.<\/p>\n

<\/a><\/p>\n

According to the AAII, investors have increased their stock and bond allocations this year, and reduced their cash allocations, despite very attractive cash yields.<\/strong>\u00a0<\/p>\n

That shows either enormous faith in financial assets to deliver fairly exceptional returns despite an elevated inflation backdrop, or that they have yet to adjust to the new financial order.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nMon, 10\/23\/2023 – 15:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/personal-finance\/retail-getting-message-stocks-bonds-can-fall-together<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Retail Getting The Message Stocks & Bonds Can Fall Together Authored by Simon White, Bloomberg macro strategist, Retail seems unfazed by the tension in the…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1434425","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-619T","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1434425","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1434425"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1434425\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1434425"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1434425"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1434425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}