The asymmetric reaction function of equities to data is likely to shift toward the downside, and do so soon.

Equity bulls have been crowing as bad data caused stocks to rise in recent weeks, thanks to the perception that it guarantees easier Fed policy. They should enjoy their moment as this evolution has been seen before and it doesn't always end well for shares.

In "normal" markets, where rate policy is deemed as roughly appropriate for the economy, strong data is positive for stocks, and weak data is negative.

When the economic outlook deteriorates sharply, benchmark policy rates suddenly appear inappropriately high, leading to a risk-averse environment. This is what we saw in the U.S. in May after the trade war escalated.