On February 18 the Chinese Year of the Pig begins. I am counselled by my Chinese friends to undertake nothing risky during the upcoming porcine year. It might easily turn from sweet to sour.
As I write, the global equity rally that began last summer is still motoring along. Last May, the world got a whiff of the sort of damage that tightening liquidity could do and didn’t like it. Monetary conditions have been easing ever since, particularly in the US.
It is a challenge to see how the rally will end. Long-term interest rates remain very low. Published inflation – but not asset price inflation – is declining. The Federal Reserve is believed to be more likely to ease than to tighten.
Global economies are in the cool but seductive platinum blonde phase, with lower US growth being offset by stronger European and (hoped for) Japanese performance....
