There'll be plenty of comment here but there is an interesting situation developing that may surprise by it's size and camouflage.
We are entering an amazing digital revolution which is boosting productivity and generating new investment opportunities. The discovery of new cheap oil and gas in developed countries that will make them independent of the turbulent middle east and a return of manufacturing to rich countries with the advance of 3D printing and robotics technology which is not dependent on low wage process workers.
We saw this happen with the microchip and the subsequent (good) deflationary effect it's use caused. The microchip was the catalyst for the events that are happening now.
So then cheap energy and new technologies will have the same effect as the humble chip and have a deflationary effect. Goods manufactured using new technologies will be come cheaper.
Add that to the deflation that seems prevalent in almost every developed country as companies and individuals alike deleverage you have a recipe for a global deflationary grip and high unemployment.
Eg. US inflation figures discount food and energy which appear to be rising at an alarming rate. But core inflation is struggling at ~1% which shows, amongst other things, that wages in the US are in fact falling due to high unemployment and also the embracing of new technologies and cheaper energy for business.
Profits are rising.
But is that a bull or bear market inducement?
Depending on where you stand it could be either. Do you hope for the best but prepare for the worst?
Those things that will create deflation are also driving markets higher!
Perhaps it is a bull run in a bear market? The obvious stance is to look at time and how it will affect these cycles eg. will the outcomes be more onerous the longer it takes for markets to come into equilibrium?
What you see is not what you get. Central Banks are aware of where global markets and economies stand and there is little they can do. Same for us I guess.
