The perception of the ease from which future gains in risk assets will be derived is making all-time highs along with the markets.
For every concern that we had six months ago, that same concern has been replaced with sense of wonderment as to "how can I go wrong?"
How can I go wrong buying when the Fed will inevitably ease rates at some point in the near future?
How can I go wrong buying when even if we go into a recession it will be offset by more liquidity in the system?
How can I go wrong buying when NVDA is doing nothing but going up, with the AI narrative creating exponential gains?
How can I go wrong buying when inflation is no longer a concern?
How can I go wrong buying when Trump is likely to win the election, creating a dream scenario for the US economy via lower rates and business friendly policies?
How can I go wrong buying when the S&P is surely headed to 6000?
How can I go wrong buying when China is injecting massive amounts of liquidity into the global financial system?
How can I go wrong buying when the US economy is as resilient as it has been?
How can I go wrong buying when even though rates have skyrocketed, the markets don't care?
A near endless list of "how I can wrong?"
This is in stark contrast to Q4 of last year when the list of everything that could go wrong was performing a perfectly executed camel clutch on the mind's of investors, rendering them unable to process the gains that were to come.
Now let's be absolutely clear: Being a contrarian simply for being a swashbuckling, against the grain cowboy is peak plebeian behavior.
This is not a contrarian call simply because everyone is now bullish.
Price structure, leadership and negative divergences in cross asset correlations are confirming this on multiple levels that are only growing by the week.
What is throwing everyone off, including bears who have the right idea but seem to be lacking in the ability to execute, is that we are up against ascending resistance levels. Meaning that new highs are more manipulative than would otherwise be the case.
We remain rather heavily long crypto, crypto related equities, biotech and emerging markets. Short growth and mega-cap/mega-confidence trades.
Certainly not a bearish portfolio mix, but nonetheless, more defensive than we have been in quite sometime.
Tread light. Much can go wrong.
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