Just wanted to add a thought on my earlier post. I have been thinking back about my own ideas from earlier this fall that low bond yields would lead to an economic boom and take up stocks and commodities. What has happened instead is that corporations are using liquidity to manage their stocks and to buy other companies. Instead of strong stocks, strong commodities and weak bonds, we are getting strong stocks, weak commodities and strong bonds.
Of these the commodity weakness seems like the best play. The CRB is still above its 200 day but a break below might open up the flood gates. It may also lead to shorts in some emerging market equity indices.
I don't trust bond strength here because of the currency exposure. I would rather play in German bunds for yield bets. Maybe the U.K. gilt market.
I don't trust the stock rally either as it feels like a house of cards. Maybe I will watch for a while and try to select some companies to buy stock and short bonds in. Ultimately it seems like the corporate bond market is the goat in this game.
Planning not to be very active in the short run.
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