26th November 2018
Muted replay of 2015 or end of cycle approaching 2019?
It certainly helped nerves this week that the US was distracted by their Thanksgiving celebrations and politics in the UK calmed down, after the Eurosceptic Tory rebels’ spectacular failure to deliver on last week’s promise to bring about a vote of no confidence against Theresa May’s leadership. Still, stock markets took little notice and continued their decline, fanning widespread discussion over whether a 2019 global economic downturn has become all but certain, now that risk asset markets seem to be anticipating one.
US economy – weaning off cheap credit
During 2018 the US economy has once again been the global growth engine, after demand from China and business activity in Europe slowed. But with stock markets in the US now caught in the downdraft as much as elsewhere, even though consumer demand and corporate profitability remain as high as ever, it is worth taking a deeper look at what could slow the US economy down to a level that may justify recent stock market falls.
Italy suffers from lack of European Unity
As Brexit dominates headlines up and down the UK, you could be forgiven for thinking that it’s doing the same on the continent. But on the list of issues preoccupying Brusselite politics, Italy’s firebrand government is arguably higher up. Since the populist coalition came to power back in June, markets and European leaders have tossed and turned over their proposed expansion of the budget, and what it could mean for the EU.
Is volatility paving the way for a ‘Santa Rally’?
Investors have endured a bumpy ride during 2018. Initially, equity returns were driven up by a robust acceleration of economic and corporate profit growth, continuing the nearly uninterrupted upwards trend that began in 2016.
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