Global economy may have bottomed & will recover
Robert Burgess | 08 Nov 2019 00:30

Sure it’s a cliche, but markets truly are for- ward looking. Valuations are driven not so much by what has happened but by what will happen, or at least by what is expected to happen. Understanding that helps explain the latest rally in global stocks, which has put the MSCI All-Country World Index on the cusp of a record high despite a complete lack of earnings growth.

Although that measure failed to advance on Nov 6 after reports that President Donald Trump and President Xi Jinping of China may not be able to sign a partial trade deal until December, it could have been much worse if not for some optimistic data coming out of Europe.

Germany, which is the euro zone’s largest economy, said factory orders soared by 1.3% in September, blowing away the median estimate of 0.1%. Not only that, but the final October Markit Eurozone Composite index reading for October came in higher than forecast, as did retail sales in the region.

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