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  • Writer's pictureEdward Ballsdon

"Whites of their eyes"

(Published 19 Sep 2023)



RESEARCH CONTENT:


  • There is evidence that price momentum in some risk assets is dissipating.

  • Some Leading Indicators and inverted yield curves are flying red flags about future economic growth.

  • However, history cautions against using leading indicators and inverted yield curves to pre-empt market events, as the lag can be very long.

  • Current valuations seem poor and implied volatility low given the flags and contracting credit metrics

  • The question now is whether investors sitting on material gains in consolidating markets will remain invested or decide to take profits, and if so, whether price support levels hold.

  • Time and focus will be well spent on monitoring price momentum for new negative trends, identifying any divergence signals and spotting price support breaks, especially in more leveraged economies.

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