Photo: Bloomberg TV
The excruciatingly low news flow is reflected in low stock market trading volume and volatility.People are bored.
Goldman Sachs is “metabored.”
However, September should prove to be more interesting. From Morgan Stanley’s Global Cross-Asset Strategy team:
September bristles with risk for investors. The Troika returns to Greece in early September; the German constitutional court will rule on the ESM on 12 September; and ECB bond purchases are conditional on Spain or Italy formally applying for assistance. The Fed meets informally at Jackson Hole in late August, and the FOMC convenes on 13 September. In Vincent Reinhart’s view, substantial action (particularly QE) is very unlikely.
Greg Peters of Morgan Stanley notes that the current “risk asset rally is defying at least conventional fundamentals.” However, he doesn’t expect this trend of stocks rising as earnings estimates fall to persist.
We think, at a minimum, now is the time to hedge downside: volatility is low, markets are losing momentum, risks are on the horizon. Equity and currency volatility is now at pre-crisis levels… However, we are increasingly of the view that markets will see a tradable sell-off start in the next month or two.