Individual security selection will dominate market exposure in the longer term
Think of last week as confirming the move away from the comforting notions of synchronised global growth and ample liquidity injection by central banks, writes Mohamed El-Erian
For at least two weeks now, traders and investors could be forgiven for feeling like they have been trying to drink from a fire hose, and a multiflavour one at that. Virtually every day, they have been confronted by some combination of market-moving corporate earnings and economic news, supplemented by competing policy signals and volatile technical influences. As confusing as this situation may seem, it speaks to a fundamental transition in markets that I have described before. It has two major characteristics: increasing divergence in economic and corporate performance, as well as policy; and increasing dispersion in asset valuations. Both are underpinned by macro themes that are playing out in real time. This is best seen, and best monitored in future, through a grouping of recent developments and market influences. They fit into three broad categories that speak to country and corporate fundamentals, policies and technical influences on markets. Economic and corporate fundamenta...
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