Many investors believe that the developed-economy recovery could be aggressive; certainly, much stronger than the current economic consensus. The evidence for this is the stellar performance of a number of tried-and-true leading indicators, some of which now flag a rebound of multi-decade vigor. We don’t buy it. But the more important point is this: Risk assets have already performed consistently with those upbeat leading indicators. The ‘surprise’ is, in our view, increasingly in the price of risk assets, particularly equities.
Click on charts to enlarge, courtesy of Morgan Stanley.
Some "smart economists" and "Keynesian sins" had this surprise in mind a while ago ...
ECRI's US WLI climbs higher, but at a slower pace ...
On the downside cash earns more than negative returns in risk assets!
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