Where are we in the cycle?
In many ways, that's the only question that matters for market participants, but thanks in no small part to the post-crisis monetary policy regime, it's been nearly impossible to answer for years.
Round after round of central bank asset purchases and the concurrent suppression of risk premia killed price discovery, turning some corners of the financial universe into the Walking Dead in the process. The cycle has been extended and re-extended, as misallocated capital is never purged. Given central banks' express desire to generate inflation, an ironic side effect of their policies has been a disinflationary "zombie" dynamic.
Given the above, there have been any number of false dawns for those looking to call dusk on the expansion.
It's also possible that the conversation no longer makes much sense - or at least not vis-à-vis developed economies. “My thinking is that this is probably the end of [the] traditional business cycle – no more big and ‘frequent’ amplitudes, but more like undulations around a flat line”, one strategist we spoke to in March suggested. It could be that there are no more recessions in the traditional sense. Just more
Please support this website by adding us to your whitelist in your ad blocker. Ads are what helps us bring you premium content! Thank you!