And welcome, more importantly, to the everything rally.

The price of just about every financial asset is headed up,

and they are headed up in unison.

Let's take just a couple of examples.

Start with US stocks, which are right back up

against their all-time highs.

We'll look at junk bonds, which are enjoying a screaming rally.

Finally, consider commodities.

Gold and iron ore are jamming.

Even oil is rising, and the world

has too much of that stuff.

What is the explanation for all of

this synchronised exuberance?

The most popular theory has it that a powerful combination

of activism by the Federal Reserve and other central banks

and low growth expectations have driven real bond yields -

that is inflation-adjusted bond yields - down below zero.

This means, to simplify only slightly,

that borrowing costs are negligible.

Or, to put it another way, that money is free.

Under those conditions, no asset price can be too high.

After all, you can always borrow more free money

and pay a higher price.

Furthermore, the market has concluded

that real rates will be low or even negative

for a very long time.

Now, the market could be wrong about how long

these super low rates will be with us.

It could also be wrong about the relationship

between super low rates and other asset prices.

But what is especially worrisome right now,

is that in a downturn it used to be investors' best defence was

diversification.

Owning a mixed basket of different kinds of assets

meant that some asset you owned would always

be outperforming - at least relatively - at any given time.

But in the recent rally everything

has gone up together.

And the rally has been explained by a single simple factor,

low real rates.

If that theory is correct, when the downturn comes

there will be no place to hide.