Good News Worrieson Tuesday, 18 June 2013. Posted in Global Markets, Market Flash
The markets have seemed very nervous the last few weeks. The reason is the discussion on “tapering” of the US Federal Reserve’s quantitative easing which has been helping keep interest rates down and money plentiful.
We have a couple of quick points to make.
- The economy is improving, despite the Federal sequester and budget cuts.
- The Federal Reserve is not likely to increase rates soon. Probably next year.
The history from 1994 is not too bad, equities bounced back quickly.
Having said that, a few words of warning.
- The US equity markets have had a good run the last 7 months. A correction is due at some point.
- The problems in Europe haven’t disappeared, just postponed and a fix doesn’t appear imminent.
- Japan’s climb from the quagmire seems to have stalled, at least for the moment.
Still, overall, it pays to keep in mind that a return to normality is to be expected at some point pretty soon and that is wholly a good thing in the long term. It signifies the crisis is drawing to a close, finally.
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