2. October 2012 12:00
QE3 arrived essentially on cue and within the ‘normal’ 15 -18 months from the date that the last (QE2) easing ended. This Mshaped pattern of liquidity supply has occurred several times before. Commodity markets are the clear winners from every QE that we have studied. Bonds have lately been the most frequent loser. The discrete pattern of finite quantitative easings (QEs), followed by pauses, explains the recent sequence of ‘Risk On/Risk Off’ markets.
The appearance of QE3 likely heralds a renewed ‘Risk On’ phase.
2. September 2012 12:04
We have long been taken by the idea of an M-shaped financial/investment cycle. This simple prognosis from 50 years of monetary and credit history suggests this repeating pattern plays out over a ten -year period.
In short, we get two asset booms per banking crisis, with these up-legs separated by an 18-month/2-year sideways period, characterised by ranging markets, sluggish economic growth and low inflation.
Our original timeline placed this liquidity pause from Q1 2011 to Q3 or Q4 2012, with the endgame dependent on Central Banks agreeing to another round of QE (quantitative easing).