SocGen's Edwards: Clients cannot see an immediate trigger for the financial Armageddon heading our way

Dovish tightening cycle

Tom Eckett
clock • 3 min read

Société Générale's bearish strategist Albert Edwards has warned the current market situation is "even worse" than the lead-up to the Global Financial Crisis (GFC) as policymakers are "so scared" of financial bubbles bursting, they are putting the needs of Wall Street before the needs of the economy.

By central banks flagging when they intend to hike rates, Edwards said the predictability compresses risk premia, which in turn encourages higher leveraging and risk-taking. This meant the current tightening cycle remains positive for risk assets as central banks continue to want "to soothe the nerves of the financial markets" but it is not so good for 'Main Street'. SocGen's Edwards: We are now just one recession away from Japanese-style outright deflation Edwards said: "So scared (or is that scarred) were central bankers after the summer 2013 taper tantrum, they have now gone out...

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