In his latest monthly commentary, the Blackstone economic analyst reports on his recent travels around the globe and review of the economic data. He’s generally positive for both the U.S. and most other countries. There aren’t too many specific investment ideas in this essay, only a detailed commentary on the economic and political situations in key countries and regions.
There are two broad macroeconomic factors that have been influencing the financial markets and the world economies positively over the past nine years. The first is the abundance of liquidity that has been provided by the major central banks: in 2008 the combined balance sheets of the Federal Reserve, the Bank of England, the European Central Bank and the Bank of Japan were $3 trillion; they are now $14 trillion. One quarter of this monetary accommodation found its way into the real economy, stimulating growth; three-quarters went into financial assets, inflating price-earnings ratios and keeping interest rates low. The second factor has been China’s nominal growth of over 10% for the past decade. Their demand for imported goods from around the world has helped the economies of every developed country, and many undeveloped countries as well.
What could upset this applecart of favorable economic performance across the globe? I am watching eight indicators.