If everyone’s thinking alike, no one is thinking. Benjamin Franklin’s aphorism can be applied to today’s markets: if everything is going up, then somebody somewhere must be wrong.
In recent weeks everything from stocks to bonds and gold and even Bitcoin have been moving higher, but it’s not clear who’s in the right. The bond market is screaming trouble ahead, but stocks are merrily sailing along and are close to record highs. The S&P 500, the main US benchmark, managed to achieve a series of new all-time highs in June and July at the very time bond yields sank to the floor. We are seeing safe-haven demand rise at the same time as risk assets look well supported. The risk-on, risk-off pendulum is broken, or at least is swinging to a different beat. The only thing that seems to be down is the US dollar, which is feeding the demand for everything else.