Veteran Jim Walker is wary. Amongst the reasons he cited, he felt Asian markets have not fully discounted the impact of rising interest rates. He thinks Asian currencies could actually weaken this year. He also thinks QE2 is continuing to fool equity markets into thinking that there are perpetual guarantees. Uf QE1 didn't work, QE2 will not too, he argued. He is also sceptical on the job recovery in the US. And lastly, he is bearish on China. He feels that China does not have the monetary policy in place to tackle rising prices. Overall, he feels that the world is in for a long-haul slump, with almost zero growth in the developed world.
Just how credible is he? A check on my blog on 13 Jun 2009 revealed that even then, Jim Walker was not hopeful. He claimed, "The rally doesn't seem to be based on any fundamentals, because there is no real economic recovery behind it, no strong corporate earnings growth that is fuelling it. His main worry is China. People are underestimating the seriousness of the problems in China. The stock market is rallying now only because the world is pumping so much money at a time when there is little economic activity. The money has to go somewhere. It's going into Asian stock markets. Indicators are telling this outspoken economist that the world may still be a long way from the awaited recovery."
But markets have climbed far higher since. So if we believed in him then, we would have missed out on one of the greatest investment opportunities of a lifetime.
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