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LATEST INSIGHTS
Thoughts, insights and opinions from our team of investment experts
Tall Expectations Warrant Short Exposure
Many indicators of past economic slowdowns are now sounding an alarm. Yield curves in most major economies around the world are inverted. Despite these bright red lights, investors appear sanguine.
Are We Having a Recession Or Not?
Globally, growth is waning, though at a tepid pace because of the prior avalanche of government stimulus, rebuilding of supplies, and extremely low unemployment. Will central bank restraint lead to a mere petering out of growth, if inflation is quickly perceived to have been ameliorated, or is recession inevitable from one of the fastest tightening responses on record?
Up and Down
And up and down. Like a toilet seat, yo-yo, a game of Snakes & Ladders, not straight up and down like an elevator, but more like the ups and downs of a rollercoaster—that’s how the financial markets have felt lately. Unusually volatile, reacting to headlines related to inflation, rising interest rates, declining corporate earnings, layoffs, Ukraine, and covid-shutdowns in China. Emotions have been pushing markets up and down, while underlying fundamentals worsen.
Depressing the Optimists
Our glass is typically half full. Lately, the contents have been evaporating. What would fill it again? Either a substantial market decline lowering valuations, or a sudden reduction in core inflation levels along with a commensurate decline in interest rates. Neither are likely to occur in the short term. Though valuations have compressed from their highs, further deterioration is expected as the economic backdrop worsens.
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