In our opinion, US Valuations are priced for perfection at current levels. Earnings and GDP is declining, pushing some valuation metrics to near all-time highs at current prices. Opportunities in public markets have evaporated and the risk reward ratio is skewed towards risk.

US stocks, international stocks, and high yield bonds are all in negative trends, suggesting a risk-off environment. Volatility remains elevated in risk assets, suggesting a risk-off regime. Intermarket relationships, sector, style, and factor performance all indicate the need for a defensive posture. Bonds, gold, and the US dollar remain in positive trends.

The US economy is in the worst contraction since the Great Depression. Thirty million jobs have been lost in America so far this year. Global economic data continues to decelerate. The recovery will likely take more time than anticipated.



Central banks and fiscal authorities are providing record amounts of stimulus. The US Federal Reserve will start buying corporate bond ETFs this month, including high yield bond ETFs. Interest rates could move negative in the coming months across the curve in the US. The Federal Reserve may start buying equity market ETFs in the event of an aggressive sell off.