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As the debate over a possible double dip in the global economy intensifies, many optimists are taking heart from last year’s sharp revival in corporate profitability, which they clearly hope will sustain, if not global activity rates, then at least global share prices over the coming months.
By Jonathan Underhill, BusinessWire
Rabobank's market commentary, brought to you in conjunction with Morningstar, provides an overview of current cash, bond, property and equity market performance as well as some future predictions.
While the risk of a double dip for the global economy has increased we remain of the view it will be avoided.
The Investment Brief delivers a comprehensive commentary on investment markets.
The global economic recovery remains on track. This is despite rising concern over sovereign debt levels, particularly in Europe.
Read the latest review of investment markets courtesy of TOWER Asset Management.
Greece's economy, which has a total annual GDP of around $330 billion, is the 30th largest economy in the world and in some senses its relatively small size would seem to suggest that financial markets' recent preoccupation with the country's travails is somewhat overdone.
After a solid start to the year, economic growth indicators showed an increasing propensity to disappoint expectations over the month, possibly refl ecting an overshooting of previous upgrades to forecasts. This trend was most notable in the US.
Investment Insights is a series of economic and financial markets commentaries from AMP Capital's Chief Economist, Dr Shane Oliver and our Head of Investment Strategy, Jason Wong.
Faced with a deteriorating fiscal position, the Government's policy options for Budget 2010 were always going to be limited.
European authorities have provided a strong lifeline for troubled European countries. This, along with the stronger state of the global economy today, should help prevent the European public debt crisis turning into a re-run of the global financial crisis.
While Asia ex-Japan was hit hard by the global financial crisis, the region has bounced back just as dramatically, helped by stimulatory monetary and fiscal policies, a rebound in global trade and the absence of the secular constraints weighing on many advanced countries.
Have the developed economies fueled the excesses of the emerging markets?
The global economic recovery continues to build. It is proving to be hard work, but structural change was never going to be easy. The early signs are that the necessary rebalancing in growth we need to see for a sustained recovery is also starting to occur.
In our latest Investment Insight we look at why a collapse in China any time soon is doubtful. The principle arguments are that China has overinvested, its export potential is exhausted, its assets are in a bubble, bank lending has been excessive and, as stimulus is removed in response to inflation, its growth will collapse.
Somewhat unconventionally - and rather unpopularly we suspect - we remain bearish on the outlook for near term inflation rates in much of the global economy, based primarily on the current adverse trend in Asian export prices.
The blowout in sovereign debt, as a result of the global financial crisis, is proving to be a major issue. This is already evident in various countries in Europe, with particular concerns that Greece won't be able to finance its budget deficit and could default leading to contagion to other high debt countries.
In a recent article, we indicated that, after an initial rebound, the second year in a cyclical bull market is often tougher: the easy gains have been seen, shares become more dependent on earnings, but stimulus measures start to be unwound. This is what we are likely to face this year.
I must diversify, I must diversify, I must diversify. Get the message? I was reading some of the Banking Ombudsman's decisions recently about the ANZ debacle where conservative investors were advised to put large sums of money in risky investments. It got me thinking about how much is too much to put in one investment.
By Shane Oliver, Head of Investment Strategy and Chief Economist for AMP Capital Investors.
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