Investors in much of the country are waking up to Arctic temperatures and likely power outages, as a massive winter storm rips from the Ohio Valley down to San Antonio.
Otherwise, keep buying right? Our call of the day from Mohamed El-Erian, chief economic adviser at Allianz, lays out some pitfalls to this everything rally, along with a warning that investors could trip over a “market accident” if they are not careful. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.248% climbed 4 basis points on Tuesday to nearly 1.25%, a level not seen since last March, partly due to vaccine optimism.
“So the first danger in all of this excessive risk taking becomes irresponsible risk taking and you get a market accident. The second risk is the bond market. If you destabilize the bond market, you take away two reasons why people are so keen on stocks. One, this notion there’s no alternative — well if yields go up there is an alternative, second with that low, floored forever, discounted cash flow models signal buy buy buy for equities,” he said.