To RBC, This Is The Single Largest Risk To The Market Right Now

zerohedge.com / by Tyler Durden / Jan 11, 2017 1:48 PM

From everyone’s multi-strat wizard, the head of RBC’s cross-asset strategy, Charlie McElliggott

The Single Largest Macro Risk To The Buyside

The US Dollar is the “grand unifying theory asset” for nearly any and all “profile” global macro or thematic equities trades in the marketplace right now, as it represents investors being long this “new” version of “economic growth.”  As such, performance is significantly tied to the direction in the US Dollar.

SO THEN…let’s take it back to the “January Effect.”  I’ve been doing a bunch of client marketing this week, with the ‘meat’ of the discussion being largely centered upon buy-side concerns surrounding said “seasonal mean-reversion” metastasizing into something larger.  I qualify this as “something larger,” because at this time, NONE of the YTD performance reversals from Q4 have been outright PNL destroyers.  Sure, popular shorts like USTs / ‘long duration,’ EM stocks, gold and equity ‘growth’ factor are all squeezing higher out of the gates—but by and large, so too are popular longs like small cap equities, inflation, copper, ‘high beta cyclical’ equities, ‘value’ factor and HY.

The fact is, there has been a ton

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