From Davos Man To Joe Six-Pack

The conventional wisdom has flipped from “Davos Man” portfolios to “Joe Six-Pack” portfolios in recent quarters. But let's not forget the extremity of the starting point of this Great Rotation: global interest rates were at 5,000 year lows in Jul' 16 and this induced acute dislocations in asset/sector/regional valuations $1.5 trillion inflows to bond funds in past 10 years vs $0 to equity funds Real assets at 90-year lows versus financial assets US stocks at 60-year highs versus European stocks, and so on. Thus we should expect the ongoing rotation out of entrenched Wall Street to Main Street (Table 1) assets to be violent, extreme, and ultimately overshoot.