Editor's Note: Below is a brief excerpt from today's Early Look written by U.S. Macro analyst Christian Drake. Click here to learn more about the Early Look.
Switching gears, quickly, to a question I’ve been asked about a lot over the past month regarding the prospective phase transition in growth and volatility. The Chart of the Day below is from our 2Q Macro Themes deck and plots the consecutive number of quarters of accelerating growth (x-axis) vs 90-day realized volatility on the y-axis. There are a few simple but significant observations and one larger, equally significant implication:
Because growth masks and/or predominates over pretty much every other investment factor/risk, imbalances can build and risks can cumulate latently .… until the growth cycle inflects. |