Global Asset Class Rout: It's Time To Pay The Piper

The global rout continues. Currently, there is only one-way traffic, and it's all about getting investors out of their current trades and into something 'more' liquid as they price out the "liquidity premium" provided by Central Banks. The global worries about the Fed tapering its bond-buying program, coupled with fears of a liquidity crunch in China, is sending all asset classes into another tailspin this Monday morning.

Continuing last week's theme, equities, bonds and the Emerging Markets remain under pressure, even the safer short-end money markets is not immune as money continues to favor cash and the "dollar." The capital market is finding it difficult to adjust to the idea that the Central Bank liquidity that investors have taken for granted over the past few years is about to dry up. The BIS has warned that the "longer the current accommodative conditions persist, the bigger the exit challenges become." Hence, any adjustment will not be easy as various asset...