• Michael Hartnett of Bank of America Merrill Lynch brings Rod Serling into the mix:
"[investors are] trapped in a Twilight Zone between the end of QE and the Fed's first rate hike. Markets it says will "be cursed by mediocre returns, volatile trading rotation, correlation breakdowns and flash crashes. For this reason we continue to advocate higher than normal levels of cash, adding gold and owning volatility in mid 2015. . . [A]cleansing drop in asset prices cannot be dismissed."
• Saxo Bank's Stephen Jacobsen talks of fundamental changes in asset allocation in coming years:
[Saxo Bank] "rarely makes significant changes to its long-term outlook, but this quarter is different. Not only do we expect a steep increase in yields but higher gold and energy prices too. The dynamics at work are plenty: The model's predictions are always based on the lead-lag of different economic factors. . . .The biggest "news" is that we are very close to the secular low in interest rates globally. This will have material impact on stocks, fixed income and asset allocation over the coming one to five years, and probably an 'upside-down' return profile relative to performance since the financial crisis started. Commodities will outperform and yields will move up by another 100 bps before Europe once again slides to downturn and the US flirts with recession in early 2016.
• UK Nobel Prize winner Andrew Smithers offers a brief but keen insight:
"QE is a very dangerous policy, in my view, because it has pushed asset prices up and high asset prices, we know from history, are very dangerous. It is very strongly indicated by reliable measures that we're looking at a stock market which is something like 80 percent over-priced."
• Universa Investments' Mark Spitznagel pulls no punches in a recent Bloomberg interview:
"The beautiful thing about the business is when the markets get really rich, really overvalued, really distorted like today, the cost of insurance goes way down. There's incredible complacency. People are selling (tail insurance). This is another one of those carry trades that are so popular today. We're back to this Great Moderation. There's a religious belief that the Fed is our savior. And it's priced into the market. We're at an extreme point today. We're as extreme as we've been n the last hundred years except for 2000. . . You can read into that what you want. (The year) 2000 was one of the great bubbles in human history. So here we are today just shy of that. . . Giant liquidity holes are a part of market dynamics. If you think you're going to lean on these buy orders (in order to get out) is the height of naivete." (Excerpts as posted at Zero Hedge)
• Legendary money manager Jeremy Grantham predicts a bust like no other:
"Over the next seven years we think the market will have negative returns. The next bust will be unlike any otherbecause the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets. We have never had this before. . .Assets are overpriced generally. They will become cheap again. That's how we will pay for this. It's going to be very painful for investors. . .There is no evidence at all that quantitative easing has boosted capital spending. We have always come roaring back from recessions, even after the mismanaged Great Depression. This time we are not. It's anecdotal evidence, but we have never had such a limited recovery."