The numbers are in for first quarter performance for global stocks and bonds. Taken at face value, the price signals emitted by public markets contrast quite a bit with what they were predicting last year for the global economy. Yet the economic and policy realignments implied by markets may well fall on deaf ears when it comes to immediate and durable changes in the behaviour of key economic actors.
Judging from their absolute and relative performance, last year’s markets correctly signalled a better growth trajectory for advanced countries, overall and compared to their counterparts in the emerging world – the most notable contrast pitting enthusiasm for a Japanese rebound against Chinese growth pessimism. Continue reading »