When central banks loosen money, it’s time to get bullish and fill your boots with shares. Loose money has been the primary inflator of asset prices in the last 10 years or longer. Should 2019 see slower economic growth – but easy money – equity prices will rise.
Meanwhile, central banks continue to flag growth risks The Bank of England said current financial forecasts were overly optimistic, adding that Brexit-related uncertainty is burdening the economy. BoE has downgraded its 2019 GDP forecast to 1.2% against 1.7% expected in November. This follows the European Commission’s view of "substantial" risks that lowered its growth forecast to 1.3% in 2019 from 1.9% previously. This clearly indicates that no rate hike will be coming in 2019. US stocks sold-off on news of economic weakness in Europe plus word that US-China trade resolution would be delayed. Expectations for a US recession have now risen to 20%.
