Earlier today we showed a remarkable chart - and assertion - from Bank of America: "In every major market shock since the 2013 Taper Tantrum, central banks have stepped in (even if verbally) to protect markets. Following the Brexit vote, markets no longer needed to hear from CBs as they rebounded so quickly that CBs didn’t need to respond." As a result, buy-the-dip has a become a self-fulfilling put.
Year to date, Emerging markets (EEM) have lived up to their name, as they have emerged to gain much more than the S&P 500. Of late, EEM was up nearly twice that of the S&P 500 this year. (See YTD performance below)-
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A selloff which started in Asia, driven by renewed liquidation of Chinese and Hong Kong tech stocks and accelerated by weaker metal prices which pushed the Shanghai Composite below a key support and to 4 month lows...
One wonders if the Fed ever reads the reports issued by the Office of Financial Stability, which does a surprisingly good job of laying out the risks facing the market at any one time, which incidentally are far greater than various Fed presidents would care to admit.
Just two weeks ago, Bank of America's Chief Investment Strategist Michael Hartnett came out with what was more or less the most apocalyptic big bank forecast for the coming year. In it, he predicted that the market would not only peak in the first half of 2018, and that there would be a flash crash "a la 1987/1994/1998" in just a few months.