“Back Up The Truck And Buy, Buy, Buy:” Why One Economist Thinks “There Is No Risk” Any More

If markets crash deep into the red, blame this guy.

With UK markets celebrating the Tories’ sweeping majority in Thursday’s vote, Chris Rupkey, the chief economist at MUFG Union Bank, sent his clients an eye-catching note. According to MarketWatch, it was entitled: “Buy it. Buy it all.”

Riding high on yesterday’s rally, and with global markets looking up early on Friday thanks to reports that Trump and China were finally ready to sign the ‘Phase One’ trade deal, Rupkey argued that markets would be celebrating a successful, managed Brexit and trade truce for the foreseeable future, and that traders faced “no risk” in growing their positions.

“Back up the truck and buy, buy, buy” Rupkey wrote, doing his best Cramer/Gartman impression.

Before this, Rupkey was best known to us for delivering a moving critique of the Fed’s decision to move ahead with interest-rate cuts earlier this year. But in this note, it appears Rupkey is throwing in the towel on this skepticism.

Already, the market has spoken. The public has zero faith that today’s events will resolve the “growth strangling” trade dispute. If anything, the deal likely won’t be resolved in a “big, big way” until after the next election.

Right now, after breaking through all-time high after all-time high on the back of trade optimism, is the time to go all-in and “throw caution to the wind,” Rupkey said.

“There is some smoke and mirrors here, but it looks like this is the time for investors around the world to throw months of caution to the winds and take risk off the table, and they are, buying stocks and selling bonds with abandon, as the economic outlook brightens and central banks shelve their plans to cut interest rates further,” he writes.

This, of course, would mean that none of the trade deal has been priced into the market yet. After months of pumping by the Trump administration, we find this hard to believe.

There’s no more risk? Sure, many seem to be backing away from their most dire predictions for 2020. But there’s still global economic data showing a manufacturing recession, and a Federal Reserve that’s already chafing traders by warning that it will likely stay ‘on hold’ next year (i.e. no more rate cuts), and plenty of signs of a market top.

If you’re piling into stocks right now, you probably have an outlook on 2020 that “looks better than it has in months,” Rupkey said, adding that he think the global economy will surprise investors next year.

“Take risk off the table as a concern to be hedged. There is no risk,” he writes. “Bet on it.” 

‘There is no risk?’ – we’d happily take the other side of that bet.