NEW YORK (TheStreet) -- While panic trades highlight how gloomy the economic outlook has turned, they're also warning that investors might want to watch out for potential upside in case markets see a bounce.
Stocks have tumbled more than 10% since the beginning of the month. Oil, which many analysts pegged at $100, has dropped near $80, signaling fears of a recession. Gold has hit another record high, above $1,700 an ounce. And investors are still rushing to Treasuries, despite a downgrade last Friday, pushing yields below 2.5% on the 10-year benchmark.
Amid a rally in low-risk assets, strategists are questioning whether an emotional response is fueling a speculative bubble. At some point, oil may bounce, gold may become too expensive and the minuscule yield on Treasuries may not be worth the risk of a drawn-out political battle over what to do with the U.S. deficit in the long term.
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