Debt And Global Money Supply Support Equities But What Else?

February 18, 2019

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Global policy makers considered a 20% fall in the S&P 500 a concern, and changed their language around the end of 2018.

Historically, policy operating procedure responds by increasing either debt or liquidity to support equities. Liquidity is preferable when support needs to be injected quickly. So it is a standard reaction that global money supply took off late in Q4 2018 into early 2019.

Will this be enough given that the earnings down cycle has only just begun and could possibly match the 2008 cycle?

What is the likely 3 year expected return in current conditions? The chart below shows that 70 years of data suggests that this may not be a good time to be invested.

Should you ignore the risks, at a time when bonds and equities are signalling a warning?

Are you comfortable with your risk management strategy? Perhaps it’s time for a review.

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