From Humble Student of the Markets January 29, 2013 - 3:47am
Just as BoAML strategist Michael Hartnett trumpeted his Great Rotation into equities investment theme which postulated that under-invested individuals and institutions would rotate from bonds into stocks, his colleague FX strategist Richard Cochinos made a tactical call against the risk-on trade (via Business Insider):
"Bottom line," Cochinos writes, "Several indicators are calling for a risk correction. USD selling has reached previous reversion levels and greater buy-backs are to come."
Cochinos first points to U.S. dollar selling by "real money" investors (i.e., pension funds, mutual funds, insurance companies, et al.), which has reached extreme levels recently – 1.8 standard deviations from the mean, to be exact.
Cochinos believes that the US Dollar is highly oversold and due for a reversal - and a USD rally would typically coincide with a risk-off environment.
In addition, ...
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