“Many of these same investors, however, tend to agree with us on a two year view that things are likely to end very badly.”
“The risk is that the market is hugely vulnerable if it hears a distant bark, let alone feels its bite.”
“It could happen tomorrow given the extreme expense of US equities and the near universal consensus of a continued acceleration in the economic cycle despite the Fed also in the midst of a tightening cycle.”
“I was too optimistic!”
“This is quite amazing given where we are in the global economic cycle.”
“If this is, as we strongly believe, an aberration and the equity yield reconnects with the red dotted arrow, then investors should be petrified of the next equity bear market.”
“The last time volatility in the US bond market was this low (and complacency this high), 10y yields spiked up some 150bp in only four months as part of Bernanke’s ‘Taper Tantrum’. “
Yes, “how wrong” I/we was/were.
Or was “we”?
The problem with healthy debate is that so many people back themselves into a corner and take any contrary opinion as a personal attack on their very identity as a human being.”
” Now we have central bankers patting themselves on the back for having done a jolly good job. That surely is the most worrying, hubristic signal of all.”
“Collapsing bank lending growth is signalling that something is amiss and the Fed should stop raising rates, but I expect rapidly rising wage inflation will push the Fed into overkill. Fed tightening cycles almost always end in recession and this time will be no exception.”
“One reason why the market doesnt believe the Fed dots is that investors cannot conceive of Fed tightening to the point that it causes the stockmarket any serious damage.”
Ok, so if you’re bearish, a market skeptic, or otherwise prone to cynicism, you know that when SocGen’s Albert f*cking Edwards comes stomping through, you just have to sit your ass down and let the master do his thing…
I’m not into hero worship. You might say that this is one time where I agree with Donald Trump who, when asked about heroes last month, hilariously said the following: “I don’t like the concept of heroes. The concept of heroes is never great.”