“FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
The Market Advance Has Been Short Covering (Gluskin Sheff)
The stock market had its worst post-Christmas performance since 1937, and the biggest rally on record while kicking off the new year. “The myth is that we are now seeing the clouds part to the extent that cash will be put to work. Not so fast. It is very likely that much of the market advance has been short-covering and some abatement in selling activity.”
The market can celebrate that the worst impact of the fiscal cliff has been avoided but the spending cuts are still up for debate. “So as equities now retest the cycle highs, it would be a folly to believe that we will not experience recurring setbacks and heightened volatility along the way. This makes for a terrific backdrop for nimble trading but beyond that long-only strategies would be well advised to hedge with calls on volatility given how cheap this insurance is right now.”
The Three Scenarios For The Political Economy Of 2013 (Project Syndicate)
The link between politics and economics will continue in 2013, according to PIMCO’s Mohamed El-Erian….”
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