The last three economic upswings since the financial crisis all ended with our inflation scorecard pointing upwards and central banks, tightening policy. This one is different. Continued commodity price falls are pushing inflation lower.
In appraising the outlook for equity markets, it is instructive to consider the path of the US dollar. The world’s reserve currency is a barometer of global financial health. When the dollar is stable or appreciating, it acts as a store of value, protecting savings and encouraging investment.
The investment clock is in the equity-friendly ‘Recovery’ phase of the global business cycle with growth indicators positive and inflation indicators pointing downwards on the back of continued commodity price weakness.