This podcast episode discusses the narrowness in breadth in the equity market and the importance of stock picking. It highlights the concern of when valuations will begin to matter and potentially lead to a significant correction. Three potential risks are identified: a reacceleration of inflation and growth, deteriorating liquidity and outflows from equities, and a substantial gross gear risk. The ongoing policy mix of heavy fiscal spending and tight interest rate policy is crowding out companies and consumers, leading to a narrow market performance. Until the bond market reacts or growth slows down, this narrow performance is expected to persist.
