Demand for price protection against large swings in major global equities and currencies is approaching its highest level since March this week, according to the Bank of America Merrill Lynch hedging skew index.
The market’s growth expectations are still too high as trade tensions rattle the world’s two biggest economies, creating ample room for more negative surprises in the next few months, according to Kettner. Emerging markets in particular need a “cross-correlated wash-out” before they will become attractive again, he said.
“It’s no longer an environment where you can just say, ‘I’m buying an ETF, see you in six months,”’ Kettner said.
This article was provided by Bloomberg News.