Equity Insights: Tail Risk Continues to Wag the Markets

Franklin D. Roosevelt, the 32nd US president, famously stated in his inaugural speech in March 1933 that: “the only thing we have to fear … is fear itself.”

At the time, the prevailing unemployment rate in the US was a staggering 25%. That economic cataclysm seems a million miles away now. The US unemployment rate, at 4.7%, is close to the 4.43% low in December 2006, and the S&P 500 index has reached all-time highs. Given this, it might seem surprising that investors remain unwilling to embrace the current global economic expansion that largely had its roots in China’s decision to accelerate credit growth back in the first quarter of 2016.

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