Cheap, abundant liquidityCompliments of the major central banks
Source: BLOOMBERG, ABAM
0
1000
2000
3000
4000
5000
6000
USD
(Bn)
FED Assets BOJ Assets ECB B/S
Waiting in the woods
• Rising US rates & corporate debt
• Equity Valuations• Chinese liquidity extraction
The three bears
35,00%
37,00%
39,00%
41,00%
43,00%
45,00%
47,00%
49,00%
Mar
-90
Apr-
91M
ay-9
2Ju
n-93
Jul-9
4Au
g-95
Sep-
96O
ct-9
7N
ov-9
8De
c-99
Jan-
01Fe
b-02
Mar
-03
Apr-
04M
ay-0
5Ju
n-06
Jul-0
7Au
g-08
Sep-
09O
ct-1
0N
ov-1
1De
c-12
Jan-
14Fe
b-15
Mar
-16
Apr-
17
US Corporate Debt/GDP
Rates are risingCorporate balance sheets look dangerously stretched
Source: BLOOMBERG, ABAM
Recessions followed
Chinese credit impulse still tighteningIndustrial activity slowing even more…risk to commodity prices
Source: INET, ABAM
What if Goldilocks gets caught?Drawdowns greater than 20%
ALL Share Duration (mths) Major Drawdowns1969 to 1971 30 -61%1974 to 1976 30 -43%1980 to 1982 20 -47%1987 to 1988 6 -43%1998 3 -40%2002 to 2003 11 -32%2008 to 2009 9 -33%Average 16 -43%