Bad news is still good news
LAST week's column focused on Morgan Stanley's urging to stay invested (or to "stay with the bounce") because global growth is largely on track, the US investment bank also taking pains to distance itself from the "bad economic news is good for stocks" maxim that had been driving Wall Street upwards at the time.
During the intervening seven days, Schroders in its "Chinese challenges and rate risks" report said over the medium term the prospects for global growth remain reasonable and, while a slowing emerging world (particularly China) may cause global growth to weaken, the developed world is still growing well.
"Lower oil prices seem to be feeding through into stronger consumer spending, especially in the US, Europe and UK, while real wages are rising in some parts too," said Schroders. It also said its "finger is on the trigger, waiting to upgrade emerging markets" and that the problems facing the emerging world are well known and that, in the next few months, investors should consider reorienting themselves back towards this area.
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