This is an amazing story from Charlie Gasparino at Fox Biz:
UBS is planning a mass mailing to many of its brokerage clients alerting them that they have been reclassified as “aggressive” investors following a recent change in its market outlook that some people inside the firm say reflects growing bearishness in the bond market, particularly over the long term, the FOX Business Network has learned…
According to brokers inside UBS, new guidelines will reflect a growing belief among the firm’s market strategists that the bull market in bonds has largely run its course, and that those investors who believed they had constructed a “conservative” portfolio by being heavily invested in bonds could be reclassified as “aggressive.” Some also believe the move may be an attempt by the firm to lessen its liability in the event clients who are holding large positions in bonds decide to take legal action against UBS.
Now of course, this is something I’ve been telling you would begin sooner or later since at least last October, what with bond prices being at unsustainable premiums and yields virtually guaranteeing the destruction of purchasing power in a price-stable atmosphere, never mind one with an uptick in real inflation.
Nice to see UBS plodding at the speed of a hippopotamus after a mid-morning mud nap.
Also, imagine being a broker sorry, wealth manager, there and having to explain that letter to a client who thinks he’s “safe” in his bonds. That’ll be awesome.