In markets and economics things don't go up in a straight line

In markets and economics things don't go up in a straight line. There is little doubt that global economic activity has slowed in the March-quarter and not all of it can be attributed to US weather. It appears that a sizable slowdown is underway in China in the manufacturing sector and also in the broader economy and with the PBoC looking to tighten financial conditions to curb low quality lending in the shadow banking sector, growth is unlikely to improve for some time yet. Chinese growth and stability and European deflation remain to two key macro risks in 2014, with growth in the former likely to end in the 6%'s by years end, which is probably not factored into market prices. Consequently, investors need to remain focused on earnings, not on price trends and ensure that their stocks are able to grow income payments in a still sub-trend global economy.


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