The Economy: Euro QE + Cheap Oil = Stronger global growth.  Our theme for 2015 – The Policy Pendulum Swings – is designed to capture our view that 2015 will see not only a policy swing from the US to Europe, but also highlight that the global economic clock is always ticking.  It is now six years since markets bottomed and the global economy started to dig its way out of the ‘Great Recession’.  US policymakers were the first among major economies to recognize the deflationary risks posed by the collapse of property prices and the global financial crisis.  Their proactive stance has led to faster economic growth, higher asset prices and a full recovery in corporate profits and profit margins.  When combined with a stronger dollar and cheap oil, we think non-US developed world growth will accelerate in 2015 and give a greater boost to share prices overseas than in the US, which has enjoyed decent growth for several years. 

David Fuller's view

Here is The Weekly View.

I hope they have not overestimated the EU’s quantitative easing (QE).  Super Mario Draghi of the ECB is a force field on his own and given a free hand would be aggressive in his efforts to head off further deflation.  However, the German alliance was raised on memories of hyperinflation between January 1919 and 30^th November 1923.  

There is a considerable risk that Germany’s monetary officials will do all they can to limit Mario Draghi’s QE efforts.  We will know before the end of January.  If Draghi’s hands are tied, there is a possibility that he will resign.  If so, the Eurozone is in even bigger trouble. 

However, patient investors who buy depressed European Autonomies which earn at least fifty percent of their revenue from non European markets, and also provide a dividend of over 4 percent, will be well rewarded for their patience.