Stop us if you’ve heard this one before: After years of bond- and money-market fund inflows and equity-fund outflows, investors grow fearful of a rebound in yields and the potential for capital losses in fixed-income, sparking a “great rotation” out of bonds and into equities.
That scenario, which implies the potential for a final, euphoric surge to what’s often been described as the “most hated” bull market in stock-market history, has been regularly predicted ever since the 2013 “taper tantrum” that drove a temporary spike in Treasury and other bond yields. Indeed, such predictions are now usually met with derision, acknowledged Julian Emanuel, chief equity and derivatives strategist at BTIG, in a Wednesday note.
But such a phenomenon has marked the “late innings” of “all great bull markets,” he argued. And the current run-up from the March 2009 low is unlikely to be an exception.
“After almost 11 years of equity market rally off the 2009 low, it is futile not to call this a ‘great bull market’. It is,” Emanuel wrote. “And…