With more disappointing economic news out of Japan and Germany, the United States continues to look like an island of prosperity in an ocean of slow global growth.
As the dust settles from last week’s “wild ride,” several market observers offer their most plausible explanations for why markets are suddenly so volatile.
While the labor market is certainly improving, inflation expectations are still depressed thanks to a rallying dollar and stagnant wage growth. Meanwhile, emerging markets continue to borrow at record low interest rates as Europeans hoard savings.
As the Chinese government continues to “rebalance” their economy towards domestic consumption and investors demonstrate nervousness over a credit bubble, emerging Asian equities appear to offer attractive valuations.