As the market has swung from despair in the first half of Q1 to sheer, central-bank driven euphoria, here are some words of cautin from SocGen's Andrew Lapthorne.
From sanguine-to-bearish-to-complacent – What next?
Having slashed rates below zero and unleashed various rounds of asset-purchases, the Riksbank (Denmark's central bank) recently warned the rest of the world that "we have reached the limits of monetary policy." Now, however, Denmark's Systemic Risk Council has raised the financial system warning level to DEFCON1, warning that low levels of interest rates have led to excessive risk-taking and risk illusion among borrowers and credit institutions...
Gold Prices Rise 16% In Q1 – Best Quarter In 30 Years
In mid-February, we warned of the looming carnage for equity market-neutral funds, and sure enough, as Bloomberg reports, one of the most popular (and successful) hedge fund trades - playing the difference between high- and low-momentum stocks - crashed by the most since 2009 in Q1. After 6 years of almost unstoppable gains, equity market-neutral funds suffered their biggest losses since 2012 - comparable to the 2007 quant crisis devastation - as weak momo stocks massively outpeformed crushing the hedgies' models.
In the past few months, the Bureau of Labor Statistics has gone out of its way to show that U.S. worker compensation is finally rising. There is one problem with that: while that may be true on an hourly basis...
... on a weekly basis, the picture is vastly different. What is happening is that weekly wage growth have gone nowhere in years, but because the average hours worked per week has declined and today hit a 2 year low of 34.4, it translates into more money per hour worked.