After another week of fairly positive market action, the pattern of last year’s global stock market sell-off and ongoing recovery this year is beginning to look more and more like the previous correction episodes of 2013 and 2016. Just as then, the combination of economic growth deceleration and central banks’ attempts to put the monetary genie of quantitative monetary easing (QE) back into the bottle caused a more pronounced market upset than many thought possible or rational. At this rate then it seems reasonable to assume that the monetary overhang created by the remedies against the global financial crisis have created capital market ‘hangover’ potential which will be with us for some years to come.
From such a perspective we could just decide to move on as we did back in 2013 and 2016 and look forward to another extension of economic expansion and rewarding capital market investment returns in this mega cycle. That is if it was not for the Damocles Sword-like threat that is hanging over this recovery in the form of trade politics on either side of the Atlantic.
