With markets in the grip of AI euphoria and myriad uncertainties surrounding the global economy, investors are understandably anxious to know where we are in the business cycle.

Yet there is no satisfactory answer because the cycle has been hugely distorted by a series of shocks ranging from the Covid pandemic to the Trump tariffs. These have in turn prompted government and central bank interventions that make a nonsense of traditional business cycle analysis.

More fruitful is to look at the state of the much longer financial cycle, which reflects the ebb and flow of risk appetite in credit and property markets, as opposed to the peaks and troughs of output and employment. Turning points at the top of this cycle are often followed by banking crises and deep market drawdowns — peak to trough falls — from which prices can take years to recover.