Financial markets seem to be pricing in an uptick in global economic conditions. Are they right?
It seems that in recent months, global markets have suffered from seasonal affective disorder (SAD). Three themes have depressed risk assets this winter. The first was the continued decline in commodity prices – oil fell another 35% between the end of November and mid-February. The second was Chinese equity markets losing another 25% between December and February, taking much of the developed world stock markets down with them. And the third was the Federal Reserve’s first rate hike in this cycle in mid-December. It was not surprising, then, that the MSCI All Country index started the year with the biggest decline since 2009.
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