Stocks are rising and investors have publicly become very bullish. But bond and currency markets are showing worry about the prospects for economic slowdown or even a recession.
There are two contradictory and ultimately irreconcilable stories playing out in the global economy; Axios Markets editor Dion Rabouin
Both the market exuberance and trepidation can be traced back to the Federal Reserve’s flip-flop on whether to raise interest rates. Analysts say the Fed’s U-turn shows that the world’s top economic minds see danger.
Global growth is slowing to a halt in much of Europe and Japan; and Canada, Australia and New Zealand may be headed into a recession this year. Central banks and international aid institutions like the IMF are issuing warnings and writing down growth expectations around the globe.
Yes, U.S. stocks are roaring and touching new all-time highs, joining a global rally in equities.
U.S. GDP expectations for the first quarter have jumped from near zero to more than 2.5% in about a month and a half.
China’s economic data has improved and investors are starting to see signs that global trade has bottomed and is poised for a comeback.
The bottom line
At some point, the global economy will have to stand on its own, without artificially low interest rates and trillions in stimulus from central banks.