The Liquidity Tide is Drowning Stocks: Tinker

There's no fooling around with this bond bubble analysis.

Of the fragrance of your good ointments,
Your name is ointment poured forth;
—Song of Solomon

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"This is a world that sees no risk in bonds, but plenty in equities, rather as the new economy saw no use for the old in 2000," says Mark Tinker, a global portfolio manager at Axa Framlington.

The commodity market [had] a similar experience in 2007-8, as analysts talked up the fundamentals as oil was pushed to $147 a barrel when, in fact, it was leverage and the emergence of ETFs and mutual funds chasing the momentum trade for the best part of five years, he said.

“The trigger for the collapse seemed to be a simple running out of momentum that then triggered the leveraged unwind,” Tinker added.

No doubt, such an unwind in the bond market is a risk here. However the bond market's size relative to commodities probably should not be overlooked. Nevertheless, Mr. Tinker's analysis is interesting and atypical. You can read the whole story in:

Liquidity Tide to Bonds Is Drowning Stocks.

—Tom Chechatka