Analysts have waxed enthusiastic about the recent rally in the stock markets and economic data from the US, Europe, and China that has repeatedly beat expectations.
Morgan Stanley analysts provide a simple reason that this jubilation may be over: the hype has finally caught up with expectations.
In the last few months, the group of 10 most important global economies has repeatedly beat economic expectations, but the number of surprises to disappointments we’re seeing hit a maximum long ago. Those analysts argue:
Despite these early year signs of stabilisation we would warn that many challenges to the global growth picture remain, suggesting that caution is required when making an assessment regarding the sustainability of the risk recovery of the past 2-3 months.
Photo: Morgan Stanley
Citi’s economic surprise chart for the eurozone tells a similar tale, though it’s only begun actually seeing more surprises than disappointments in the last month:
Notably the U.S. has seen more consistently surprising positive economic data lately, but it’s unclear how long that trend can continue before the numbers start to align with expectations: