Joy Replaces Gloom Among Global Investors as Recession Risk Fades
The world economy wasn’t as bad as it seemed in August, but may not be as good as it seems now.
Three months ago the economic outlook seemed dark. The U.S.-China trade war refused to go away, and there were signs of weakness in Germany, the European Union’s economic linchpin, as well as the U.K., which faced a messy exit from the EU. On Aug. 14 major U.S. stock indexes fell 3%, spooked by a steep drop in long-term bond yields. “Investors are increasingly selling first and asking questions later,” one analyst told Bloomberg.
Pity the investor who panicked and sold off, or the executive who shelved a planned expansion—since August, the economic outlook has brightened considerably. Stock indexes in the U.S. set records almost daily in early November. The mood has gone from gloomy to exuberant. “The bulls are back ... global recession fears vanish,” wrote investment strategists at Bank of America Merrill Lynch in a Nov. 12 note to clients.