Presenting SocGen’s “Most Frightening Credit Chart”

“I sometimes feel like ‘The Grim Reaper’, scouring the research savannah in a ghoulish quest to harvest bad news with a forceful sweep of my scythe. Imagine then my perverse delight when our credit team produced what is one of the scariest charts I have seen for a very long time. Markets shrugged off the Brexit vote in a couple of days. They shrugged off Donald Trump’s election in a single day. They shrugged off the Italian Referendum result in a couple of hours. Heck, in this mood they would shrug off an alien invasion of planet Earth. But global political risk is now at such elevated levels that investors must surely be on another planet.”
– Albert Edwards
Has the reflationary blow to bond markets from ‘Trumpflation’ and the euphoria in global equities tempered Soc Gen’s Albert Edwards’ decades long “Ice Age” bearishness? Not a chance, as he explains in his latest note ‘Presenting our credit team’s most frightening chart’. In contrast, Edwards admits to the ‘perverse delight’ at his discovery of the aforementioned chart which reassures him that global risk is at such elevated levels that ‘investors must surely be on another planet.’
While our take has generally been that it’s central bankers that are on another planet – the rest of us merely forced to play on it – we know what he means.

This post was published at Zero Hedge on Dec 8, 2016.