Churning away
The combination of elevated inflation and a credit system that appears to be signalling a recession, is at odds with the complacency seen in the equity market.
There are growing indicators of slowing economic growth with the US labour and credit markets showing signs of creaking.
Away from the US, economic growth and earnings appear to be more resilient, but inflation is meaning that policymakers are inclined to tighten policy further. This in turn may bring risk aversion back to the fore in coming months.
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