It is apparent to us that over the last five months or so we have entered a new phase: volatility has returned and unfortunately it seems that it is likely to persist for some time. The best analogue we can find for the period that we think markets are in is 1994. The main driver of the change is declining economic growth rates right across the globe, which is feeding directly into the prospects for corporates. There is a possibility that central banks will have more work to do in 2016 than they had in 2015, however we are not optimistic that it will make a tangible difference; the catchphrase “pushing on a string” comes to mind. (VIEW LINK)