Online:
Visits:
Stories:
Profile image
By silveristhenew (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

For BlackRock, This Is The Red Flag Among Record Low Volatility

Friday, February 17, 2017 6:44
% of readers think this story is Fact. Add your two cents.

(Before It's News)

With both volatility and asset correlations near all time lows…

… and complacency dominating across all global markets, one BlackRock money manager warns that investors should probably be a little more nervous.

Even as the recent stock surge and below-average volatility show investor optimism is near all time highs, markets are underpricing global political risks, said Russ Koesterich, who helps manage the $41 billion BlackRock Global Allocation Fund.

Why is Koesterich worried? The price of gold, which has failed to validate the prevailing calm, in fact just the contrary.  Bloomberg reports:

Looming elections in Europe and political uncertainty in the U.S. are among developments that could shift investor sentiment, Koesterich said. Adding to the threat is the potential impact of Britain’s exit from the European Union and a debt crisis in Greece. Such concerns have helped boost haven demand for gold, which has climbed almost 8 percent this year after posting the worst quarter since 2013.

“That hiding political risk is not reflected in markets,” Koesterich said in a telephone interview Thursday. “People are not that nervous, and there are things that could go wrong, particularly when you think about all of the political risks. That adds to the argument for having gold in a portfolio.

As a result he recommends gold as insurance. Validating his point is the recent drfit higher in gold which has decoupled from VIX, and as of this morning was trading at three month highs, up 0.3% at $1,242

“Some of this rally has been based on the fact that investors expect some stimulus from Washington in the form of tax cuts and potentially fiscal stimulus as well,” Koesterich said. “What happens if it doesn’t come?” While “there will be some stimulus, the timing, the form and the magnitude are still very much uncertain.”

In the U.S., stocks this week posted the longest rally in three years, inflation indicators have risen and the labor market is strengthening. At the same time that a gauge of global economic policy uncertainty climbed to the highest on record in January, suggesting something has to snap.

“Some of this rally has been based on the fact that investors expect some stimulus from Washington in the form of tax cuts and potentially fiscal stimulus as well,” Koesterich said. “What happens if it doesn’t come?” While “there will be some stimulus, the timing, the form and the magnitude are still very much uncertain.”

Those who are buying gold – despite the recent jump in market-derived inflation indicators – already have their answer.



Source: http://silveristhenew.com/2017/02/17/for-blackrock-this-is-the-red-flag-among-record-low-volatility/

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.