Self-interest and fear: These factors are the
\nmain driving forces of stock markets. Self- interest, the economist Adam Smith\u2019s great
\nmotivator, is currently running scared. Right
\nnow, fear is the dominant sentiment. In the
\nfirst months of 2014, the fear that the severe
\nwinter in the United States could choke off the
\neconomic recovery throttled stock markets.
\nAt present, the conflict surrounding the future
\nof Ukraine and fears of
\ndeflation in the Eurozone are weighing on
\nmarkets. Fortunately,
\nthough, political markets
\nstill have short legs. And
\nin the Eurozone, remember that declining inflation does not necessarily mean deflation.<\/p>\n
The fear that these factors could cause growth More and more investors are starting to anticipate this and are moving out of bonds and into The old stock market The crisis in Ukraine has global markets on edge\u2014and investors fear that deflation couldThe Eurozone
\nis still far from
\ndeflation.<\/quote><\/p>\n
\nto slump is likely to prove unfounded. On the
\ncontrary: Leading indicators point to accelerating economic momentum in the Eurozone
\nand in the United States. The U.S. Federal
\nReserve Board (Fed) is likely to continue its
\ntapering policy and end its bond purchases
\nby fall. At this point, low interest rates could
\ncome into focus. If they rise, bond yields should
\ncontinue to increase. As a result, 2013 and
\n2014 could go down in history as the end of the
\n30-plus-year bull market in bonds.<\/p>\n
\nstocks. This has already caused stock valuations to climb. A look at past valuation ratios,
\nhowever, reveals one thing: Equities are not
\novervalued yet. Moreover, higher growth is likely to trigger an increase in corporate earnings.
\nThe so-called \u201csmart money\u201d should underweight bonds that offer lower yields at higher
\nrisk\u2014and place its
\nbets on stocks.<\/p>\n
\nsaying \u201csell in May
\nand go away\u201d could
\nthus prove wrong this
\nyear. Indeed, stock
\nmarkets could be in for a bumpy climb up in
\nlight of the expected rise in interest rates. But
\nmarket dips could be good buying opportunities. In addition, capital flows indicate that
\nthe first investors are resetting their sights on
\nemerging markets. We, however, will remain
\nselective and favor emerging markets that
\ndemonstrate little dependency on commodity
\nprices and boast strong fundamentals\u2014self-interest still needs to be balanced with a little
\ncaution here.<\/p>\n","protected":false},"excerpt":{"rendered":"
\nprove a long-term problem for the Eurozone. What matters most, though, is an objective look
\nat economic and financial data. <\/p>\n","protected":false},"author":1,"featured_media":34545,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1480],"tags":[1663,1809,1655,1657,1651,2087,2068],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/34547"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=34547"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/34547\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/34545"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=34547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=34547"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=34547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}