The PMI for the big eight economies, weighted by PPP GDP, drifted a little lower in October. (My calculation ― the PMI for each country is extreme-adjusted, weighted and then summed together. The economies are: USA, UK, Euro zone, Russia, India, China, Brazil, Japan, and together they make up 2/3rds of the world economy.)
But notice that this weighted average is still higher than it was in 2017/18 and also higher than the strong rebound in 2010/11 after the GFC (global financial crisis) in 2008/9. A combination of low interest rates and massive fiscal stimulus.
Obvious question ― how much longer will CB discount rates remain low?
The answer for the US and Europe is at least another 12 months. But elsewhere, policy is tightening, except in China, where there is a credit crunch because of the collapse of property companies. So, whereas there have been tailwinds driving equity markets higher, these have waned, and there are now headwinds. And of course, renewed lockdown in countries where vaccinations haven't reached 90% of the population but case numbers are exploding, won't be well received.
No comments:
Post a Comment