Risks to consider
TS Lombard points out three main risks to consider going forward. For now it is all about trading the bounce, but in the long term consider the below:
1, Stagflation risk. Inflation has been pro-cyclical so far in this recovery, but the chances of it
turning counter-cyclical are growing, raising the spectre of stagflation.
2 Chinese property bubble burst. Evergrande’s downfall may not be China’s Lehman moment,but it will still have significant implications and likely lead to slower global growth.3 Tighter monetary policy. A big chunk of asset prices performance since March 2020 wasdue to easy monetary policy. Rising rates will be a headwind for both stocks and bonds.
1, Stagflation risk. Inflation has been pro-cyclical so far in this recovery, but the chances of it
turning counter-cyclical are growing, raising the spectre of stagflation.
2 Chinese property bubble burst. Evergrande’s downfall may not be China’s Lehman moment,but it will still have significant implications and likely lead to slower global growth.3 Tighter monetary policy. A big chunk of asset prices performance since March 2020 wasdue to easy monetary policy. Rising rates will be a headwind for both stocks and bonds.
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