Authored by Lance Roberts via RealInvestment Advice.com,
As I noted in yesterday’s missive, Yellen’s recent testimony on Capitol Hill sent robots frantically chasing asset prices on Thursday even before testimony began. The catalyst was the release of prepared testimony which included this one single sentence:
Overheard everywhere today...
Stocks (Dow and S&P) hit record intraday highs... (must mean everything is awesome, right?)
Since President Trump's election, global equity markets have added more absolute value than at any time in history (around $12 trillion) - surpassing the front-running exuberance that started when Bernanke hinted at QE2 in 2010.
The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3
Earlier in the week we noted the 'odd' surge in downside protection demand even as tech stocks were soaring, and now JPMorgan is noting the S&P has shifted to a large 'negative gamma' underhang which "could boost volatility if we were to sell off."
As Bloomberg notes, options markets suggest a lack of confidence in the rally. Traders are piling into downside hedges on every uptick in prices...
And JPMorgan derivatives desk writes:
Last August, in a post that attempted to explain why public pensions are really about $8 trillion underfunded, as opposed to the $3-$5 trillion that you frequently see tossed around in the press, we described pensions in the following way: