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Two Words: Money Flow

 Why is it always clear in hindsight?  Well, I guess I did see it start to happen a number of months ago but I definitely did underestimate the impact on US equity markets of this phenomenon, that is, massive reallocation of capital from both fixed income investments as well as emerging markets into the US equity market.  This, along with a very accommodative Fed adding nitrous oxide to the fire is what has been unrelentingly driving US stock markets higher.  You see it all over the place including the unrelenting selloff in the entire treasury curve, the selloffs in many emerging markets, and the unrelenting rise during the same period in the US equity markets.  Duh!  I feel like a rookie for not plowing into this trade.  While I have been net long this entire time, I have still given up most of my P&L to my futures hedges.  Will this continue, who knows?  For the time being I believe it will until I see signs that it is not.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.