Markets have had a strong run in September as the growing consensus indicates a double dip recession is unlikely. Those companies that have survived have improving balance sheets and profits.
BP have indicated that dividends will return soon , Schroder’s are anticipating a rising stockmarket in 2011 and the current bout of US statistics all indicate improvement in manufacturing and GDP output.
In the Far East and emerging economies continued strong growth which will hopefully continue to pull Western economies along is being checked with interest rate rises as inflationary pressures build. In India inflation in excess of 8% has pushed interest rates to 6%.
Demand for safe investments have meant that the most popular investment over the last few months have been gilts and corporate bonds which will eventually suffer from rising interest rates. Whilst continuing sovereign debt issues dominate today’s papers and there are still calls for continued quantative easing, the tide may be turning as the improvement is stronger than anticipated.
Comments from Brazil this week, concerning currency movements turning into a trade war, are not far off the mark. Most economies want a weaker currency to help an export lead recovery but they can’t all be weak.
