Bulls versus Bears 2023

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TSLombard with a useful wrap of the narratives. I agree with the conclusion.


All hopes pinned on a soft US CPI print. Following two months of abysmal returns, during which all major asset classes posted negative returns, the bulls have fought back hard in the past 30 days or so. They have been responding to a softer-than-expected US CPI print, fuelling speculation that the Fed would soon be done with tightening monetary policy. This caused both risk and safe assets to rally strongly (see chart on top of next page). News from China of possible easing of its zero Covid policy and the introduction of new measures to support the country’s troubled property sector further boosted sentiment. But is such optimism warranted and is the move sustainable?

On the one hand, on the other hand. As any self-respecting two-handed economist knows all too well, it is always possible to look at the same fact and derive two very different conclusions from it. This time is no different. So, bearing that in mind, we looked at 10 key market drivers and, for each of them, listed what arguments can be (reasonably) made in support of a bullish or bearish case. The table on this page provides a summary of these arguments, but we look at them in a bit more detail immediately below.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.