This week's newsletter is going to focus on how risk assets are setup given the continuing global growth slowdown and likely policy responses to it. The overall thesis is that shares and high yield bonds in the US are short-term oversold but still above a compelling entry point using a long-term metric like cyclically-adjusted price/earnings ratios. The most important near- and medium-term drivers will be the slowing of earnings in the context of slowing global growth and the policy responses in Europe and the emerging markets in particular.
The macro thesis
Let's start with a longer-term view using my overall macro thesis developed during the initial stages of recovery. The building block for this thesis goes to Richard Koo's concept of a balance sheet recession. The private sector ...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.