Why this bear market is bad for stocks and bonds

Bloomberg/Richard Cookson/6-21-2022

“It is highly unusual for both fixed income and equities to perform so badly at the same time, but inflation has flipped their correlation to the same direction.”

USAGOLD note: Cookson, who has a strong Wall Street background, says central banks do not have the “stomach” or “political backing’ to raise rates as high as required to halt inflation, that it is “likely to persist as a rumbling problem for some time.” He implies that something is needed to hedge stock market volatility but says most government bonds “look ripe for further losses.” How much, he asks, are investors willing to pay for hedges that aren’t working? Or put another way, how much are investors willing to lose pretending they have hedged their portfolios with sovereign debt.

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