Optimism on the Global Front

Over the past 2 years or so, I may have been described as a little on the bearish side… I know shocking! Especially when I thought that some of my doomsday predictions have been on the optimistic side. With the constant trickle of troubling social, political and economic news. It is easy to build a negative outlook for the future of our economic development that isn’t grounded in reality. While I’m a long way off from turning long-term bullish, there is good data and arguments to suggest that things may be looking up.

In a lawsuit the first to speak seems right, until someone comes forward and cross-examines.
Proverbs 18:17 – NIV 2011

Below is an excerpt from Salient’s outlook report:

  1. Global growth is accelerating. No matter the data series, there is a noticeable increase in real economic activity all around the world. Can this be derailed through a trade war or the property bubble bursting in China? Sure. But without a clear and present attack on the global growth engine, we think it keeps going in 2018 (Figure 1).
  2. Inflation pressures are increasing. With accelerated and ubiquitous global growth, inflation almost always follows. It’s there in producer prices now (Producer Price Index), and it’s starting to sneak into labor costs. Consumer prices (Consumer Price Index) are the last to feel it. But it’s coming (Figure 2).
  3. Interest rates are going up. With increased inflation pressures, central banks may continue to tighten. That often takes the form of interest rate hikes in the U.S. and less aggressive quantitative easing in Europe and Japan. That could be, all other things being equal, a negative for both bond and stock markets (Figure 3).

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