Is it possible that the gloom of economy watchers is after the fact? We’ve had the terrible China inspired volatility of Q4, and then the start of this year, but now China seems to be stabilising and some of the data from the larger western economies seems to be doing the same. Meanwhile we have warnings from institutions like the Brookings Institute and the IMF about slowing global growth. It wouldn’t be the first time something like this has happened. I’m unsure myself, although the bias clearly has to be to the downside for now. Currencies continue to move in a directionless pattern with no major levels being breached apart from perhaps with USD/JPY. The consensus seems to be growing that negative interest rates are not the panacea some have hoped, but interestingly the Bank of Japan is resistant to accepting the policy has failed yet. Perhaps they’re right, perhaps more time needs to be given to see how the initiative works. It seems doubtful that there’ll be too many more moves into further negative territory though, not as things stand. Central banks are likely to push for fiscal policy to take more of the strain.

Even as oil prices rebound to new year to date highs (see chart below), there is widespread disappointment at the lack of an anticipated boost to consumption from lower oil prices. I’m still holding out hope for this, but my conviction is weakening! We need to see some decent retail sales, but just maybe… maybe negative rates in some countries are actually working the other way at the moment! Elsewhere, the Nigerian government is looking at privatising some of its nationalised oil assets. Whether this will help I’m not sure, it seems like a step in the right direction to at least tackle patronage, but Brazil is an example of a partially privatised state behemoth, and the corruption that still occurred. Baby steps…

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