This could be the most important "red flag" in the entire market today
Equity markets were quietly confident that no matter what the mortgage market did, the Fed would save them in 2007.
Bond markets had already got a little nervous as collateral squeezes and forced liquidations had led to a large jump in bond risk relative to equity risk – but again this was eschewed by any number of equity long-only managers and their non-money-managing partners-in-crime – the sell-side strategist – who confirmed that any dip should be bought and the increased risk in bonds was exactly the catalyst to rotate to stocks for the long-term.
Fast-forward $8 trillion and five years and the patterns of bond and equity risk look awfully similar...
Source: Zero Hedge
http://www.zerohedge.com/news/2013-09-1 ... -decoupled