Ritu Vohora: Bear market rally or a bullish inflection?

Pain for equities

After a brutal sell-off across markets over the past six months, and the S&P 500 index officially entering bear-market territory (falling more than 20% from its record high in January), we have seen some recent signs of relief with the US equity market rallying from its 16 June low.

However, with markets still facing a plethora of headwinds, is this just a bear market rally or could it turn into something more sustainable? We are transitioning to regime that looks very different from the past decade. Moving from a period of minimum rates, unprecedented liquidity, benign disinflation, low volatility, having a Fed put, peak globalisation and valuation largesse to one of rates normalisation, liquidity withdrawal, higher trend inflation, elevated volatility, a Fed put that is deeply out-of-the-money, trend to de-globalisation and valuation recession. Indeed, bonds an...