“Volatility in all its shapes and flavours, whether you look it on a forward looking or historical basis, or across any asset class you want, is pretty much all at a 23-year low,” said Murray.
By contrast, political uncertainty is trending higher, as the UK heads into Brexit negotiations with the EU.
The fact that markets are digesting information at a far faster rate than they have done historically is evidence of this complacency, according to Murray.
“Markets appear to be generally quite fragile. Either that’s fine and everything is calm and good, or investors and markets are just being complacent and there is stuff they should be worrying about that they are not.”
One thing investors could be discounting is the real possibility that “we are getting closer to a crisis,” he said.
Similarly, there is a noticeable disconnect between valuations and expectations around a market correction, he added.
The Yale School of Management’s US Stock Market Confidence Indices revealed that institutional investors believe markets are overvalued but are not anticipating any kind of correction within the next 12 months.
“What is bizarre is everyone is confident the market will keep on chugging up,” said Murray.
“On the one hand they’re saying, yes, markets are massively overvalued, but equally, they’re saying over the next 12 months they can’t see any correction for that. At some point, clearly something has to give.”
