Adding Back Central Bank Ambiguity

Central banks are adding more ambiguity back into their reaction functions. This points to higher global rate volatility After years of repression, rate volatility is beginning to rise. This is not only a reflection of greater macro-economic volatility, but –...

Market Senses Rising Inflation Risks

Inflation remains one of the few areas where there is not an overwhelming market consensus. We see rising inflation risks The market is running out of non-consensus narratives, now that we can see the vaccine being rolled out and the potential for a strong economic...

Comparing Today’s Markets with 2009 and 2017

The remarkable resilience of equity markets this year, along with the general bullish consensus for 2021, has some parallels with previous price action in 2009 and 2017 In 2009, equity markets rallied against a backdrop of a terrible economy, but rising leading...

Fed No Longer the “Only Game in Town” for Stocks

US equities are beginning to behave more normally. The average pairwise correlation across S&P 500 stocks has plunged (top-left chart), which tells us that stocks are starting to move independently from one another and are no longer driven to the same extent by...

Plenty of Cover for Fed to Maintain the “Big Ease”

In our Market Ledger, one of the “debits” for the market is chronic insolvency. We have not really begun to see the full impact on jobs and businesses due to improved unemployment benefits, stimulus cheques and business lending schemes, but that will change as...

Revisiting Lessons from China 2015 Market Rescue

The collision of two powerful and opposing forces has created an uncertain outlook for equity markets. Aggressive stimulus from the Fed – which Powell says has “no limits” – has caused the monetary base to surge relative to the equity market cap (top-left...