Don’t bet with the bears
|The world’s largest hedge fund, Bridgewater, is reportedly shorting a selection of European blue chips to the tune of $18 billion. Should European equity investors be nervous?
No. The recent sell-off lacks the fundamentals of a sustained correction. The US Federal Reserve Bank’s monetary tightening and the consequent rise in US yields has been well telegraphed. Higher inflation, unless it goes parabolic, is unlikely to surprise traders. The age of innocence is over on Wall Street, traders will become more vigilant, but that doesn’t necessarily mean the end of the historic bull-run. The upcoming Purchasing Managers Index for February will prove the strength of Europe’s cyclical upswing.
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