{"id":398222,"date":"2019-03-06T07:13:19","date_gmt":"2019-03-06T06:13:19","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/newswire\/this-is-a-bear-market-rally-and-we-are-now-selling-it\/"},"modified":"2019-03-06T07:13:19","modified_gmt":"2019-03-06T06:13:19","slug":"this-is-a-bear-market-rally-and-we-are-now-selling-it","status":"publish","type":"post","link":"https:\/\/rinf.com\/alt-news\/newswire\/this-is-a-bear-market-rally-and-we-are-now-selling-it\/","title":{"rendered":"\u201cThis Is A Bear Market Rally, And We Are Now Selling It\u201d"},"content":{"rendered":"
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Zero Hedge<\/strong><\/a>
March 5, 2019<\/p>\n

Despite ten consecutive weeks of gains in the S&P, investors have continued to largely boycott this rally and as JPM wrote earlier<\/a>, \u201cmost investors have not participated in this V-shaped recovery other than corporates and insiders who were accelerating purchases into the sell-off.\u201d And, as we have discussed in recent weeks, one main reason for this lingering skepticism is that a majority of investors are confident that contrary to the constant media cheerleading, what we are experiencing is nothing more than a bear market rally prompted by fresh speculation about \u201cgreen shoots\u201d and \u201creflation\u201d.<\/strong><\/p>\n

Addressing this point, BofA\u2019s CIO Michael Hartnett last week noted that in Japan between 1990 and 2003 there were no less than 13 equity trading rallies that exceeded 20%, and seven trading rallies that exceeded 33%, all the while Nikkei was caught in a secular bear market.<\/p>\n

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Yet while the jury is still out on whether this is just a bear market rally for stocks, when it comes to junk bonds, Morgan Stanley has called it, and in a note titled \u201cSelling the Rally\u201d, Morgan Stanley\u2019s credit strategist Adam Richmond writes that after he turned tactically constructive on US credit on January 7, \u201cin our view, the trade is now mostly done and the risk\/reward of remaining meaningfully long US credit is no longer attractive. Specifically, we are exiting our tactical buy recommendation, and reverting to our longer-term cautious view on the asset class.<\/strong>\u201d<\/p>\n

First, explaining the bank\u2019s tactical short-term bullish view, Richmond writes that it was based on two simple points:<\/p>\n