-Market momentum driven by inaccurate hopes of a phase 1 trade deal, and the Fed’s $60 bilion per month QE had created the biggest asset bubble in the history of stock market.
-Trade risks are too complacently priced, which is bad news for earnings
-Rates Curve steepening doesn’t mean Bonds recession warning has vanished.
-The FED QEs essentially had a dampening effect of creating 3 month lead which is by the way the usual curve reaction ahead of an actual recession
Market Odyssey
Central banks abnormal monetary policy story is like Odysseus journey far from home (negative rate, yields, rising deficit).
Eventually central banks need to come home (normalise rate) like Odysseus did. Just like Odysseus central banks need to choose to go home facing Scylla (Mother of all crashes) or Charybdis (End of global economy). Odysseus choose Scylla and lost more than 60% its crew.
-Trade risks are too complacently priced, which is bad news for earnings
-Rates Curve steepening doesn’t mean Bonds recession warning has vanished.
-The FED QEs essentially had a dampening effect of creating 3 month lead which is by the way the usual curve reaction ahead of an actual recession
Market Odyssey
Central banks abnormal monetary policy story is like Odysseus journey far from home (negative rate, yields, rising deficit).
Eventually central banks need to come home (normalise rate) like Odysseus did. Just like Odysseus central banks need to choose to go home facing Scylla (Mother of all crashes) or Charybdis (End of global economy). Odysseus choose Scylla and lost more than 60% its crew.
