The week ahead: There is a smell of February in the air; Short sellers having the time of their year. The Thomson Reuters Most Shorted Stock Index has dropped 19% since Sep.

Stocks could fall 40% to 50% to reach fair value, with recession in first half of 2019: Morgan Street Capital

via @MFoxCNBC

  • Investors should brace themselves for a significant stock market correction, as well as a recession in the first half of next year, warns investor Mark Yusko.
  • In fact, he says, fair value for equities would be down about 40 percent to 50 percent.
  • “It’s just going to be painful for a while to adjust this overvaluation,” Yusko says.

The week ahead: There is a smell of February in the air 

Record Exodus From Credit Funds Outpaces Flight From Stocks

via BBG

Nervous money managers fled from corporate bonds like never before in an exodus that outpaced stocks.

Record outflows hit funds that buy investment-grade debt from the likes of Apple Inc. and Ford Motor Co., according to Bank of America Corp. strategists citing EPFR Global data. The redemptions totaled $7.5 billion in the week through Oct. 10.

By comparison, investors pulled $1.4 billion from equity portfolios during the period, while government and Treasuries actually saw inflows, according to the data which takes a snapshot of the ETF and mutual fund landscape. High-grade bond gauges have also suffered the steepest losses of all the Bloomberg Barclays indexes in this month’s market meltdown.

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