Investors could choose any number of catalysts for the global risk sell-off in recent weeks
Investors could choose any number of catalysts for the global risk sell-off in recent weeks. It could be 2014 profit taking, ECB policy disappointment, USD rallying, US Fed anxiety, global growth fears, Asian freedom protests, geo-medical concerns or whatever. Regardless of the trigger, the news which has unsettled markets has not been 'new' as the vast majority of the aforementioned regional issues have been known and unresolved for many years. The key issues are centred around market valuations and the sustainability of earning growth, as the global economic expansion remains well below expectations and disinflationary risks persist. Markets moved up from cheap valuations in late-2011 on the back of continued stimulus, but will struggle beyond their 2014 highs unless earnings growth is delivered. This will remain a tough ask as the recovery shows no sign of improving despite heightened optimism and continued stimulus, because the positive impact of these variables is being outweighed by rising global debt levels. Overnight report available here: (VIEW LINK)