Merrill Lynch Called It

They didn’t get it right in the clown’s mouth, but one month ago, Merrill had an inkling of what was to come.

The bank said 2007 would be the “year of the dividend”, with fear returning as the VIX and VDAX volatility indexes – widely used in option trading – rise from record lows.
“We think global interest rates are going to rise a lot more than investors are discounting, and this is a worrisome outlook for profits,” said Khuram Chaudhry, chief European strategist.
“We’ve seen liquidity everywhere, in equities, property, bonds. It’s been a one-way bet for investors, and they’ve taken on a lot of risk. But they’re not looking beyond the news to the slow drip-drip effect of interest rates. It matters when central banks tighten monetary policy,” he said.

(H/T: B-Riz.)

Posted by Eddy Elfenbein on March 2nd, 2007 at 12:50 pm

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