UBS Warns Everything Is Overpriced, Prepares For Sell-Off

Wolf Street reports:

UBS “leapfrogged” – as Bloomberg called it – Bank of America as the world’s largest wealth manager with $1.7 trillion in assets, up 9.7% from a year ago. Global wealth management assets rose 8.7% to $18.5 trillion. These firms get to manage part of the wealth that central-bank policies have generated at the top. So they have some responsibilities, like helping their clients escape the sinewy arm of the taxman, driving valuations ever higher with their trillions – “doing God’s work,” as Goldman CEO Blankfein had put it so eloquently – and preserving their clients’ wealth when the going gets tough.

And UBS just warned in its latest Weight Watcher that the going will get tough. The report is subtitled chillingly, “We are worried. We reduce risk – for now.”

The warnings are surrounded by terms of flimsy optimism: “The world is slowly recovering and we do not think we are approaching the top of the cycle yet.” Or “the stock market should continue to rally.” These and similarly soothing terms are supposed to make us feel less panicky, apparently, about the harsh reality delineated in the report.

Turns out, “it is now time to scale down risk.” They’re “concerned about valuations.” They reuse Fed Chair Yellen’s term, but in a much broader sense, pointing out that “equity markets are stretched,” all of it, not just social-media and biotech stocks.

Just a reminder.