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- The violent rotation in equities is sparking hopes of a fundamentally-driven rally
- It has been aided by record fund inflows and a spike in CB liquidity
- But the details of both the flows and the liquidity leave us skeptical
- Expect the rotation to continue, but not the rally
- Free clip from first ten minutes of 3 July webinar
- Even as the rally continues, it does so on ever more fragile foundations
- The problem lies neither with the economy, nor with central banks being slow to lower rates, nor even with politics
- It is that the liquidity which fuelled markets in H1 looks increasingly likely to be turned off
- Full replay of 3 July webinar with Q&A
- Even as the rally continues, it does so on ever more fragile foundations
- The problem lies neither with the economy, nor with central banks being slow to lower rates, nor even with politics
- It is that the liquidity which fuelled markets in H1 looks increasingly likely to be turned off
- Open to clients with Group Webinar or One-on-One subscriptions, and to the press
- Recent softness in risk is not just the fault of France
- The underlying drivers of the rally have been faltering
- The outlook for H2 just darkened considerably
- Recent statements are a reminder of the importance of neutral rates for policymakers
- But they also illustrate confusion – not only about the level of r*, but even as to what it is supposed to be measuring
- At the heart of the confusion lies a failure to distinguish between the impact of balance sheet on markets, and of rates on the economy
- This potentially leads to very different conclusions for r* and policy
- Markets and economies should be analyzed as ‘complex systems’
- Their fat tails and emergent behaviours fit poorly with traditional linear economics, but very well with complexity modelling techniques
- Lessons from other complex arenas apply equally well to investing
