In a phrase, bank lending standards. These charts speak for themselves. JPM with the note.
The equity market rebound since October is drawing investors in. Many, who were convinced last summer that any rally should be seen as just a bear-market rally, are now nurturing increasing optimism that recession can be avoided altogether and that earnings could stay resilient, in essence that markets have entered a sustainable recovery mode.
While we were looking forward to a market rebound from Q4 of last year, and believe that initially Q1 will stay robust, given what was light positioning and supportive seasonals, we do not expect that there will be a fundamental confirmation for the next leg higher, and see rally fading as we move through this quarter, with Q1 possibly marking the high for the year. The key monetary signals are sending warning signs:
