After a particularly sour series of market drops, sometimes there’s a limp-laden lift, referred irreverently as a “dead cat bounce.” But that’s rude. This afternoon we’ll jump right in, with three different analyses covering recent market volatility, starting with a very busy chart. All three indicate a tentatively favourable future.

 

Must Love Spreadsheets: A key question, mulled over in the data-packed boxes below, is whether the current volatility arises from “growth scare” or a precursor to recession.  The top left table below shows the U.S. economy endured four growth scares in the last cycle, with each turning out to be a relatively good buying opportunity. In contrast, a recession would likely mean further, longer weakness in risk markets (see right table). The good news, for now, is that all the indicators continue to provide some reassurance that the expansion remains intact.  See our U.S. recession risk scorecard in the bottom left table.

 

 

Vexing volatility

This is indeed a unique period with peculiar challenges that are well outside the scope of a normal business cycle. Equity markets are having a tough time gauging the impact of these pressures and how long they will last. In our weekly Global Insight piece, we look at what markets are facing and why we believe equities can deliver worthwhile gains over the next 12 months.

 

Regional developments: Canada’s unemployment reaches record lows; High-yield corporate spreads widen on U.S. interest rate concerns; Expecting European earnings downgrades ahead; China lockdowns impact supply chain and exports.

 

More here: Global Insight Weekly

 

Still more on this theme, the link listen here  will take you to a 12-minute audio chat, taped after Wednesday’s market low. It already feels a bit out of context after having had couple of better days since then, but it might be worth listening to.

 

Enjoy your weekend!

 

Mark