MACRO PERSPECTIVE - Is the global economy seeking something new ?
Monthly macroeconomics analysis by Philippe Waechter, Chief economist of Natixis Asset Management.
"Since last summer, the perception of the global economic cycle has been wavering between a fairly optimistic view that reflects a return to growth and the end of the crisis, and a more worried image resulting from hurdles that interfere with or postpone the shift towards the more positive outlook.
To avoid focusing on and aggravating the more negative viewpoint by increasing uncertainty, key central banks have maintained neutral strategies. They will keep interest rates extremely low while emphasizing the impact of their use of "forward guidance" in their monetary policy to bolster the expectations of private players and influence the future.
Investors vacillate between positive and negative scenarios, which may lead to significant financial market fluctuations, especially for risky assets. However, there seems to be a tendency to invest in the assets of industrialized countries. Consequently, in these countries or areas, interest rates remain low without any indication of rising and risky assets are highly valued. As a result, stock market valuation indicators are high and returns on corporate and government bonds are low. Thus, emerging market assets have weakened. The perception of the global cycle is one in which industrialized markets, especially that of the United States, are strong and emerging markets are weak. This is reflected in transactions. This image has been enhanced by recent incertitude.
This general reticence should be explained to better understand the immediate effects on the economic cycle. The analysis reveals two explanations. On the one hand, there is a dichotomy between industrialized and emerging markets. On the other hand, there are questions as to whether or not industrialized countries can prolong growth and finally put an end to the crisis."