Plotting the spread cycle

Marketgraphic

Many believe that the flood of liquidity central banks provided in the aftermath of 9/11 and to fight the market impact of 'Enronian economics' played a crucial role in asset price inflation during the last few years. However, while central banks can affect the amplitude of cyclical swings, they cannot affect the character of the cycle itself.

Leverage and profit growth of companies are crucial parameters for pricing equity and debt through the cycle. In chart 1, we highlight the real investm

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