This week at the SALT Conference, I’ve had the opportunity this week to speak with some of the smartest, most well-connected investors in the country – credit guys, long-short equities people, analysts, traders and on and on. I won’t name drop, but suffice it to say there’s probably a trillion dollars under management represented here and I’ve learned quite a bit about how the institutional consensus is shaping up this year.
Lots of people are talking about the Things You Don’t Want To See if you’re very long risk assets like stocks and corporate bonds right now. They are all happening at once:
1. Collapsing home builder stocks and fading real estate data.
2. A US dollar on the verge of ripping to the upside.
3. Treasury bonds refusing to back down, nudging their way higher daily.
4. A deteriorating number of new highs for individual stocks as the indices flirt with record levels.
5. Influential managers who’ve been bullish for most of the rally starting to turn cautious (Einhorn, Cooperman, Tepper, etc)
6. Stalling earnings growth.
7. Defensive stock leadership
8. Huge divergence between small caps and large caps.
All of these things are blatantly occurring now. None of them are positives.