Here Are BofAML’s 4 Reasons To Worry About Risk Assets

We’ve talked incessantly about the risk of getting too complacent in emerging markets after a stellar Q1 for anything with an “EM” prefix.

Those who need (or want) a refresher are encouraged to see the latest here:

The “Curious Curse Of May”: Here’s Where The Risks Are

Don’t Look Now, But Something Cracked On Tuesday

It’s “Make-Or-Break Time” And We Could See “A Painful Cleanout”

Simply put, there’s every reason to believe what we’ve seen so far this year in EM is unsustainable, although in a note out Tuesday, Deutsche Bank seems to disagree. To wit:

So we suppose that’s something of a counterargument.

But for those who, like Bloomberg’s Mark Cudmore in the third post linked above, think we might be due for something of a “painful cleanout,” BofAML has what the bank calls “4 key factors which argue for a more nuanced view” on risk assets going forward. Note that point #1 is precisely the same point we made here.

Also, this is supposed to be applicable to risk assets in general but as you’ll see, there’s a particular emphasis on EM. More below…

Via BofAML