Global economy has been limping along for years
It has been a matter of time before the markets shrugged off the complacency bred by a decade of low interest rates and quantitative easing, and accepted the new reality
Paradigm shifts tend to happen slowly, and then all at once. That’s the lesson I’ve taken away from the recent market turmoil. As I wrote last week, the surprise is only that the upset didn’t come sooner.
Pundits may have pegged the worst Dow drop of the year to fresh bond yield curve inversions in the US (a historic predictor of downturns) but the underlying signs of sickness in the global economy have been with us for a long time. The question was when the markets were going to put aside the complacency bred by a decade of low interest rates and central bank money dumps, in the form of quantitative easing, and embrace this new reality.