Can anyone smell burning? There’s certainly a whiff of something in the air around financial markets, where the mood is shifting from cautious relief to outright red-hot exuberance. The greybeards who have seen a few market shocks in their time know this is not necessarily a good sign.
On financial TV channels, on conference stages and in certain corners of financial-market research and commentary, a clear message is emerging: it’s time to go all in. “The biggest risk in markets today is that you are not taking enough risk” is a phrase I’ve heard several times in the wild. The message is: You’re going to miss out, and you’ll regret it. Every dip is a buying opportunity, every dislocation is a chance to snap something up on the cheap. More, more, more, and now.
Without question, this is working, at least in the short term. What started as a nervy relief rally at the end of March, when the wisdom of crowds decided the war in Iran would eventually get better rather than worse, has turned into a powerful force. The benchmark S&P 500 index of US stocks has pushed some 18 per cent higher since that point — a truly astonishing turnaround that owes much more to robust corporate earnings than to runaway vibes. The index now stands at around 7,500 and the bulled-up optimists are setting their sights on 8,000 and beyond.