Growth Cycle Outlook: Time Is Running Out For Risk Assets

For some months now I have been banging the drum on how economic growth has been slowing and is set to meaningfully deteriorate come the middle of 2022. Unsurprisingly, my growth outlook has not changed since I penned my most recent article detailing the subject.

Alas, we are coming ever closer to the inflection point whereby financial markets will succumb to the significant growth, liquidity and policy headwinds abound. Within this Growth Cycle Outlook I will rehash why I continue to believe a significant deceleration in growth is likely to rear its ugly head in the coming quarters, and whether we will see one last rally in risk assets before this change in trend.

Checking in on the forward-looking leading indicators of economic growth, the Chinese credit impulse peaked back early to mid-2021 and its impact is clearly starting to be felt in developed markets.

Source: Julien Bittel

G5 central bank asset purchases are too signaling that global PMI’s are likely headed lower in the coming quarters.