Too hot not to handle

Economies will overheat. Worst in the US (but UK and Australia in tow). This will start a two year equity bear market, starting in a matter of a few months or at the very most by the Autumn. Inflation will rise, for the reasons we have outlined many times but now too because of excessive demand growth. There will be no diversification in equity markets. Where the US leads the others will follow. Bond markets will fall in synch too. The bear market will find no succour from policy — the ammo is spent.

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