And what comes next?
“Whatever the reason, it’s probably a good bet that consumer spending will remain underwhelming until Americans feel more comfortable using their credit cards again. And while that will provide a boost to both activity and bond yields it will also, ironically enough, set the stage for the next recession.”
“Decide questions for yourself like whether global growth is expanding or not? At the end of the day is there likely to be additional or less quantitative easing pumped into the system? Are sovereign wealth funds apt to continue to increase their commitment to global equities or go back to sovereign debt coupon clipping?”
“This will be like knowing you’re going to be pushed off a cliff edge, preparing for the worst, and then landing on a ledge just below. It doesn’t mean you won’t ultimately plummet to your death, but there’s the relief of an unexpected opportunity to save yourself.”
“Just as the Federal Reserve is finally taking the plunge, and as a new wave of politicians in the US and Europe look bent on redefining anything from haircuts and dress codes to the pillars of the Western liberal order, any talk of ‘mean reversion’ seems a bit out of sync.”