Navigating between economic Fear and financial Greed
Financial markets have been back with a vengeance during the first quarter of the year, and yet, we have rarely seen so many doomsayers among the forecasters of the global economy. True, certain European countries are in – or close to – recession, but there is still a lot of economic momentum out there, especially in the US and Emerging markets. In our view, recession fears in the US are overblown, and that should provide some support to the rest of the world. With major central banks like the Fed or the ECB turning dovish, the major risk our there is that financial markets enter the “Greed zone”. We are not there yet, but the strong pace of the rally year to date warrants some caution going forward.