In 2008, the world experienced the worst financial crisis since the depression of the 1930s. In response to the decline, the central banks lowered interest rates to stimulate lending, and started printing money in the form of quantitative easing program. These measures helped the economies of the developed countries to grow and in response, global stocks rose. In fact, all the major indices in Asia, Europe, and United States rose by triple digits.
However, markets do not go up forever. There is recent evidence that points to slowing economies. This year, central banks and leading organizations like the International Monetary Fund and the World Bank have lowered their economic forecasts.
By looking at the economic calendar, there is evidence that a slow growth environment is the ‘new normal’. The global manufacturing PMI has declined to almost 50 while inflation remains significantly lower. In China, exports have shrunk while the Q4 growth was 6.3%. In the US, the economy is expected to grow by slightly over 2.0% this year after growing by 4.2% in the second quarter of 2018. The same trend will be seen in Europe, where Italy is currently in a recession.
As a trader, this should not worry …
