Edward Harrison — James Montier: The Advent of a Cynical Bubble

James Montier is one of my favorite market strategists. He is really good on behavioral economics. And his work inspired one of my favorite posts here on 17th century philosophers Descartes and Spinoza. James is also very good on his macro because he understands modern money and the sectoral balances framework of the late Wynne Godley....

Credit Writedowns

James Montier: The Advent of a Cynical BubbleEdward Harrison

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We are going from a market protected by the Fed to one in which the Fed is dragging the market in tow. As the Fed has begun lifting rates, the market has consistently proved to underestimate the Fed’s conviction. And I believe this trend will continue, driving interest rates higher. This will, in turn, create equity market volatility.

If this happens, the Fed will likely move aggressively to "prove" its determination. (It's about creating expectations, after all.)

Rising real yields, household debt and ECB tightening
Edward Harrison