Independent Strategy

Living on the sandpile

The world is closer to a recession than markets anticipate. This report sets out the many interlinked causal factors that make it so. Even if each of these factors could not cause a global recession on its own, by coalescing they can. Belief in the central bank ‘put’ continues to be rewarded, as the rebound in equities over the first half of 2019 demonstrates. But there is a difference between markets recovering following a growth scare and the realities of an actual downturn. We’d pay closer attention to bond markets than equities. Bonds are the tails wagging those central bank dogs, not the other way around. The data also support the bearish thesis as confidence continues to be knocked around by a cocktail of risks which run deeper that just President Trump’s trade wars.

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