By Tyler Durden
With both volatility and asset correlations near all time lows…
… and complacency dominating across all global markets, one BlackRock money manager warns that investors should probably be a little more nervous.
Even as the recent stock surge and below-average volatility show investor optimism is near all time highs, markets are underpricing global political risks, said Russ Koesterich, who helps manage the $41 billion BlackRock Global Allocation Fund.
Why is Koesterich worried? The price of gold, which has failed to validate the prevailing calm, in fact just the contrary. Bloomberg reports:
Looming elections in Europe and political uncertainty in the U.S. are among developments that could shift investor sentiment, Koesterich said. Adding to the threat is the potential impact of Britain’s exit from the European Union and a debt crisis in Greece. Such concerns have helped boost haven demand for gold, which has climbed almost 8 percent this year after posting the worst quarter since 2013.
“That hiding political risk is not reflected in markets,” Koesterich said in a telephone interview Thursday. “People are not that nervous, and there are things that could go wrong, particularly when you think about all of the political risks. That adds to the argument …read more