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Stimulants matter more than growth

Published Wednesday, May 14th, 2014

It seems that we are back to bad news being good news as far as the stock markets are concerned. Data from China is poor, German investor morale is at its lowest for over a year, US retail sales were disappointing in April and the Russian Economy Minister fears that Russia will be in recession this quarter.

None of this bodes well for global growth, but it does bode well for more monetary stimulation in China and Europe. Even the Bundesbank is rumoured to be a convert to the adoption of a range of stimulus measures by the ECB. From threatening to hit $1.40 only a week ago, the euro plunged to $1.37 yesterday.

Stock markets love monetary stimulation more than anything else so the S&P broke above 1,900 for the first time yesterday and the FTSE 100 has its eyes set on the magic number of 6950.60, the record high achieved in December 1999. We all know that without real growth this is a market rising on artificial stimulants, but no-one wants to miss out on the momentum.

to read the rest of the report, please click here 

Posted by David Hufton