Are Central Banks triggering a bear market?

by Michael J. Howell25. September 2017 14:51

Is a 2018 Bear Market Coming? Are the G4 Central Banks About to Make Another Major Error by Reversing QE? Watch Capital Flows to Find Out

This report analyses latest Central Bank QE actions against the background of global capital flows – or a potential clash between Tyrannosaurus and Godzilla? We argue that, although policy-makers have vowed to tread slowly in reversing QE, the facts that often dominant cross-border flows already appear to have peaked and that Central Banks are starting out from a much less accommodative position than widely acknowledged, must heighten systematic risks. Feeding these facts into a statistical probit model that has been informed by machine-learning techniques warns that the consequence may be a bear market in World risk assets starting in 2018. This is not yet certain, but watching the upcoming direction of cross-border flows will tell us a lot more.


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