Historians will look back in astonishment that this wasn’t front page news.
— Wolf 🐺 (@WorldByWolf) October 12, 2023
After a brief break in the last few days, we are back to the new normal:
Stocks and bonds being positively correlated, particularly during down days.
One thing seems evident:
We are no longer in the golden era for 60/40 portfolios. pic.twitter.com/bzXkRmi3JJ
— Otavio (Tavi) Costa (@TaviCosta) October 12, 2023
El-Erian: Stocks and Bonds Are in for a ‘Painful’ Ride and Cash and Cash-like Assets Is Safer
Economist Mohamed El-Erian strongly advises turning to cash and cash-like assets as a shield against increasing market volatility. With stocks and bonds facing turbulence, El-Erian has significantly bolstered his holdings in cash and similar assets. Concurrently, he warns of a potential economic downturn, suggesting heightened caution in other investment avenues.
Spiraling Toward A ‘Debt Crisis’? Part 2: Felder
Brian Riedl warns of an impending “debt crisis” as the 10-year bond rate surges to 4.7%. Washington’s failure to secure lower interest rates combined with rising deficits puts the economy at significant risk. Despite current market optimism, a high rate above 4% could spell disaster, not only for the bond market but also equities. With historic data suggesting negative impacts, about a third of Russell 2000 companies aren’t profitable, a record high since 1985. The stock market’s current vulnerability echoes the concerning patterns of 1987, hinting at potential turmoil ahead.