Talking Points:
• All assets and asset classes have a connection to risk trends as a reflection of investor appetites
• Recently, favored measures of risk (S&P 500, USD, etc) have taken divergent bearings from the theme
• This is a reflection of disengaged or weak risk conviction rather than a change to structural changes
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This week US stocks are down, European shares are up, Emerging Markets are sharply higher, Yen crosses are unchanged and the USDollar is down. From a risk trend perspective, this is perplexing. To many, the interpretation is that the asset they are looking at is no longer bound to the universal laws of investor sentiment. Others believe that investors are generally confused. But, a more logical explanation is that risk appetite itself is lacking for conviction. What are the implications of this unengaged risk theme? What happens when it rematerializes? We discuss this in today's Strategy Video.
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