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Everyone Is So Bullish That Bears Are Hard To Find

Three things we learned last week:

1. The risk rally has stalled after a spectacular November.

Global stocks fell last week, with China’s CSI 300 Index tumbling the most since September. The yuan’s rally also stalled, after failing to break 6.50 per dollar. Some consolidation is understanable after such a strong rally. After all, U.S. fiscal stimulus and Brexit negotiations remain in limbo and the Covid-19 virus is still spreading.

While the near-term risks linger, the consensus among market participants is that 2021 will be a good year for risky assets, thanks to the vaccines. A Bloomberg survey found strategists and investors are overwhelmingly bullish on emerging markets with China as their top pick for stocks, bonds and currencies.

If there’s a market correction, there may be plenty of investors waiting to buy the dip.

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