Growth returns despite recession fears

ON ASSET ALLOCATION

Consensus economic data would suggest the major part of GDP growth downward revisions is now behind us. Continued uncertainties in the US Congress regarding the new fiscal package prevented immediate upward revisions in the US.

For the eurozone revised revisions made at the end of September suggesting something close to recession may weigh on GDP growth consensus figures for October. However, there is growth. In respect of quantitative easing we currently have three shows in town with the Bank of England going for a ‘plain’ QE, the US Federal Reserve twisting, and a more long lasting refinancing at the European Central Bank. This has had the effect of removing key interest rates as the central issue and the market therefore expects a long period of very low rates. While this will not change any of the pro...