QE – It’s a kind of magic

Markets are no longer following fundamentals

The post-crisis environment seems to be showing positive signs that QE has worked and we can look forward to strong, rising asset prices with minimal volatility. However, beneath the surface of this are the underlying problems existing that suggest investors should be expecting to see low returns and higher volatility for the foreseeable future. Primary indicators such as unemployment figures are generating ‘false’ signals, giving investors the wrong impression regarding the health of particular economies and consequently there is a misallocation of capital.

 

Nick Clay, Portfolio Manager, Newton.

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