After being at the really wrong end of the pain trade of 2022 - long bond proxies (can't not be; I focus on real assets), who's been stopped out in this years pain trade of short: ponzis, over levered co's, bond proxies and rate sensitive stocks?
Although I went into this year positive for RE/Infra the market moves have surprised to the upside. Liquidity is up which explains a good chunk of it but interested to hear if anyone was positioned way too bearish and have been stopped out and covered? And then is gut feel to reset the trade?
Can't make sense of the current bullish outlook apart from the technicals of overly bearish positioning plus increased liquidity and then FOMO buying which is justified by arguments of a soft landing of 'dovish' CBs. Nothing fundamental in it, wouldn't want to fight the trend at the moment though.
To me market implied rate cuts don't match with CB rhetoric, ISMs don't match with cyclicals performance, implied rate cuts don't match with a soft landing, implied rate cuts don't match with junk yield spread narrowing. What am I missing?
Only true contra trade I can see is double top inflation. Fin conditions looser, CBs peaking rate increases, commods rallying, China reopening leading to increased demand/stickier core PCE.
Me - though it was because my options (puts on shitcos) expired otm.
Tell me about it.. Some of my shorts went absolutely parabolical in January.
I think bonds have woken up to the fact that the path of inflation and rates they are pricing in is way too optimistic. Equities will follow… eventually
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