Equity Engineer – January 2016 | Global growth has 99 problems but inflation ain’t Yuan

Global market outlook: Declining global growth has driven major economies back to currency war for a bigger slice of the shrinking growth pie. US, Japan and Europe have gone down the path of currency devaluation to increase their share of manufacturing since the GFC. Appreciating USD has forced China to devaluate Yuan to remain competitive with a slowing economy. Falling commodity prices and currency devaluations are creating deflationary environment. Central banks have created a prolonged low growth and low inflation environment while trying to protect the global economy against a prolonged recession. The current fear in the market is mainly based on the US markets and the corporate reporting season. Market view: We see the next leg of the market rally to start in February after the risk in corporate reporting season in US and Australia subsides. US markets are showing technical signs of potential correction, but the next week of results will set the tone for the market short term. (VIEW LINK)