Click For Photo: https://www.zerohedge.com/sites/default/files/2018-02/trader%20looking%20at%20screen_2.jpg
When warning over the weekend that there has been a regime change in equity markets and that instead of buying the dip investors should sell the rip, Goldman's co-head of equity trading Brian Levine countered the traditional response that despite the "technical selloff", investor psychology remains intact with the following:
I've heard many "write-off' this correction as being technical in nature. Well, yes, that was the trigger, but if you're hanging your hat on that, you're missing the bigger picture. The market had effectively quadrupled over the past 9 years. Why? Obviously numerous variables contribute, but it would be hard to dispute that unprecedented, globally coordinated easy monetary policy was your primary driver to force investors out on the risk curve. Sure, rates have been gradually rising the past few years, which the stock market has easily digested, but there's always a threshold that sparks a seminal change. And I don't think it was a coincidence that the S&P topped out on the very same day 10-year yields made 4-year highs (a week ago Monday the 29th)....and rates have backed up a further 15 bps to 2.8% currently. The fact that bonds couldn't rally in the equity selloff is evidence of a regime change in the multi-year equity bull market.
Words - Goldman - Selloff - Fundamentals
In other words, Goldman no longer believes that one should "ignore the selloff because fundamentals remain strong."
Adding to this overnight, SocGen's Andrew Lapthorne writes that "fundamentals are nearly always strong when the market starts to sell-off." And, as the strategist adds "when markets correct, the standard retort is that in the long-term it pays to stay invested and that the fundamentals remain strong and supportive."
Validity - Statement - SocGen - Corrections - S
To determine the validity of this statement, SocGen looked at prior corrections in the S&P 500 to see how fundamentals looked at the point when the market turned....
Wake Up To Breaking News!