Recent advances in stock markets are pointing to a brighter future, reflecting improvements in the US economic outlook. But are we really basing expectations on solid fundamentals, perhaps treading on thin ice? Markets reflect recent volatility, yet the fear factor is declining. Where are we heading?
Ever since the collapse of Lehman Brothers in late 2008, the global market outlook has been unclear as the developed world is still struggling to recover. Investment trends have not played out the way they used to, inasmuch as fundamentals no longer take markets where they are expected. Sometimes markets do exactly the opposite of the expectations.
When I look at how markets have responded to certain indicators in recent history, my conclusions point to a number of different potential outcomes from recent history. One example was the release of US unemployment figures. The results were far from encouraging and yet markets gained. Prior to 2008 this was almost unheard of.
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