The recent market sell-off tells me that the global liquidity contraction has begun, driven by a rising cost of capital, falling risk appetite and a reversal of carry trades. This will eventually cause a slowdown in world economic growth some time next year.
The huge blowout in high-risk debt will not be a one-way road to hell. Equity markets are due for a sigh of relief and could well rally back to their highs or higher before the next round of liquidity tightening takes them lower.
Access intelligence that drives action
To unlock this research, enter your email to log in or enquire about access
