The markets have rallied impressively since the end of September, especially when set against their disastrous performance on the year to that point.

The term “pivot” is very much in fashion these days infinancial circles: the markets are looking first and foremost for signs that inflation is going to “pivot” downwards, which could signal an end to today’s aggressive monetary policies. But there might be other turning points too, i.e. in the downward revisions to economic outlooks or in the poor relations between China and the USA...

This has been a very challenging year on the markets, which have been hit by one complication after another. These have included hawkish monetary tightening to counter unexpected inflation, disruption on the forex markets, a severe economic slowdown, and a very tense international political environment. No wonder there is so little visibility. But the markets seem to be at a point where risks could become asymmetric, meaning that good news, even if it’s only relatively good, could trigger rallies that would outstrip the declines that would occur if the negative scenario indeed came to pass, at…