Crash Without a Cause?

We can’t identify a cause for this extremely violent correction in equities, except to think it is further evidence of the cognitive dissonance that has informed this unloved bull market, the need to not accept that the global economy is pulling out of secular stagnation. We have a long list of things that didn’t cause it, including all the conventional narratives about yields, inflation and the Fed. It may in fact be causeless, like the algo-fueled crash of 1987. The equity risk premium has blown out from near cycle tights to the post-crisis mean, so suddenly stocks are fairly valued. That’s not in and of itself a buy signal. But with the first-order earnings bump from tax cuts almost complete, second- and third-order effects in the offing, and a synchronized global growth acceleration underway, it’s a gift to be able to buy stocks at fair value.