Evidente: The IMF's Patience with the ECB Wears Thin

Evidente: The IMF's Patience with the ECB Wears Thin. The updated World Economic Outlook reveals that the IMF is (rightly) fed up with the ECB's timid approach to monetary policy. Monetary policy in the euro area remains slow to respond to the persistent decline in inflation and as a result, the region is vulnerable to any shock that leads to further disinflation or outright deflation. The IMF appears to have adopted the Larry Summers 'secular stagnation' view of the post crisis global economy, which draws heavily on the Reinhart/Rogoff interpretation of history; that recoveries from balance sheet recessions are structural and therefore painfully slow. As long as the IMF and other economic forecasters continue to downgrade expectations of global growth, investors should be overweight safe assets and defensive sectors within stock markets, particularly companies that offer sustainably high payout yields, and strong earnings predictability. Australian stocks that score strongly across screens for payout yield and earnings predictability include: CSL, NVT, AMC, TLS, DLX, WOW, APA, CBA, BXB, SYD and CPU. (VIEW LINK) @salvatoreferraro


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