Move over long US dollar, there’s a new trade in town. We don’t need to remind everybody here what happened to the dollar after having those honors back in January, but to anybody holding cryptocurrencies, this is a red flag…

from Zero Hedge

… at least according to BofA’s latest, just released monthly Fund Managers Survey, in which 181 participants with $549bn in AUM responded to dozens of questions, among which “what do you think is the most crowded trade.” In September, for the first time ever, the top answer, per 26% of respondents, was Bitcoin, (which as BofA handily reminds us was up as much as 344% YTD), #2 was “long Nasdaq” (up 20% YTD) according to 22% of fund managers, while the “Short US Dollars” (-11% YTD) was third at 21%. Note: long US$ was most crowded trade as recently as Mar’17.

 

 

 

 

Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin…

Another notable change in September: “central bank policy mistake” is no longer the biggest tail risk – that honor now belongs to North Korea by some margin (34% of respondents) , followed by Fed/ECB policy mistake (21%) and Chinese Credit Tightening (15%).

 

 

 

Looking ahead, the smartest people on Wall Street said that over the next 6 months, a recession would be the most surprising event (54% of respondents), while an equity bubble least surprising (net -30%).

 

 

Finally, in terms of most over and undervalued assets, volatility was declared by far the most overvalued (54%), with sterling, oil, Italian equities and Chinese banks in distant 2nd through 5th slots.

 

 

 

Meanwhile, on macro, FMS growth optimism continues to sag (+62% in Jan to +25% today) but profit hopes rose a tad this month (+34%)…greater conviction in EPS than GDP; notable divergence in FMS perceptions of fiscal policy (“easy”) vs. flatter yield curve shows US tax reform most obvious catalyst for steeper US curve.

What is also interesting is that “Mean reversion” has become a contrarian theme as investors cut expectation of higher bond yields: rotation back to QE themes of scarce “growth”  & “yield” (e.g. EM), away from “value” (Japan, banks) as investors shun mean reversion, slash expectations for “much higher” bond yields (+26% last Nov to 5%); energy (“value”) UW largest since Mar’16, utilities (“yield”) UW smallest since Aug’16.

To summarize: most on Wall Street are short volatility even as they suspect everyone else of being long bitcoin (explaining the tepid performance by the hedge and mutual fund community), nobody expects a recession although most admit the equity market is a bubble, and most are hopeful that the economy will surprise to the upside even as earnings outperformance is taken for granted.

Good luck trading that.

 

  1. Everything is red flag on SD

    In reality fine to print money if debt held by the people themselves.  But only ruin when loans and interest are paid to Bolshevik tribalist neanderthals calling themselves Jews.  Name which is insult to real Palestinian Semites and real Jews

    Canada had many entitlement programs, but their debs was flat zero until they acquired “loans”(counterfeit paper without consideration) from Khazar mafia neanderthals

    • it is true, there is nothing wrong with an enlightened people using fiat money. Don’t blame fiat money.

      So you think bitcoin will fix that? I think history shows “they” are smarter than you… And finance is just a reflection, nothing real. Creative accounting can go a far way. That’s a natural law of your fantasy. No, that’s the nature of your fantasy, and if you think you got it all figured out, that’s when you go on a free floating device, I guess. And yes, finance is just a tool, not an end in itself. (you can’t eat it, lol)

       

      rectifying the economy… I’ve seen them…. the bubble has not popped, the bubble has not popped… enfoirés de merde! 🙂

  2. Who really cares what the market thinks ? Long…Short… it does not matter for Crytpo currency, there are no futures contracts. It is one market that cannot be manipulated or hammered down. Of course big money can come in and cause hefty swings by buying in, then selling again, but ultimately they lose as there are transactional fees to pay, albeit relatively low mining fees. And of course there are Chinese whisper’s pun intended… will cause temproary glitches, but the overall trend is upwards and I am pretty sure it will continue that way.

     

  3. you remember the original greenbacks? Their value went down and up, and it is said, they were redeemed at par when they were in the right hands. Same for gold, its value will go up “when it is in the right hands”. It’s not so much a market.

    With bitcoin, who owns bitcoin? I recently picked up: about 50% of all bitcoins mined is held by the creators. And the FBI was said to own 35%, which they seized during some raid. That would bother me. Anyone got other inf.?

    I can guarantee you the clueless secret services, probably all 21 of them, you know, the central intelligence agencies, I mean these clowns, they certainly are involved.

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