The mood has changed – See the “confidence index” from T Theory below for data. The driver in my opinion is the gradual acceptance of disinflation/deflation – as Albert Edwards has been pointing out and as Russel Napier has substantiated that when inflation gets low enough it becomes a problem for risky assets. (Edwards–Napier)
2. There is growing belief that the “narrative of the central banks” is failing. We’ve had such low yields for so very long now that it’s becoming an issue. I’ve discussed this with several of you and the consensus opinion is that the European Central Bank’s Mario Draghi lost out with his latest “wide in scope, small in size” programme; that the Bank of Japan looks like a deer caught in the headlights; and most importantly, Fed chief Janet Yellen and her team are doing a poor job in communicating their message.
