George Soros talks up the global recovery
A number of commentators, including the legendary investor, believe that the world is heading for a return to growth
Hopes are growing that the world has turned the corner, after a number of high profile figures made encouraging noises about the state of the global economy. Billionaire hedge fund manager George Soros said that "the economic freefall has been stopped" and "national economic stimulus programmes are starting to take effect".
His thoughts marked a change of heart, as he was negative on the markets last year. He expects Asia to recover first and the US shortly thereafter.
His was not the only optimistic prognosis, with George Buckley, Deutsche Bank's UK economist hopeful that the British economy might start to grow again this June, saying "The green shoots phraseology might need to be replaced with outright recovery."
His opinion is important as few other notable City economists have made such bullish comments.
The bullish tone chimes with analysts on Wall Street, who believe the US will start growing again later this year, helped by its government’s wholesale rescue of the banking industry and quantitative easing measures.
And Paris-based watchdog the OECD has also pointed to "tentative" signs of relative improvements in the UK, Italy, France and China. However, the bears pointed out that not all Soros’s comments were positive for the medium-term. He expects the recovery only to claw back half the drop during the downturn and then stagnate.
WHAT THEY ARE SAYING
Steven M Sears, Barron’s: "Many traders are debating if last week's strength in the financial-stock sector following the release of the Federal Reserve's stress test is the start of a meaningful advance or a one-time pop caused by swirling market forces, including the collision of short-sellers, preferred stock strategies, and retail investors attracted by inexpensive stock prices. If Soros is right, the recent lift in stock markets could turn into a range-bound environment."
Editorial, FT: "The end of the world has been cancelled for now, if we are to believe recent market movements. Confidence is slowly returning to investors, who have discovered they are still alive after last autumn's near-death experience. Government policies - from unorthodox central banking to stress testing - have soothed the worst fears. The signs of rekindled optimism are everywhere. A long rally has brought equity markets back from the abyss reached earlier in the year. The mood has changed so much that people are even willing to buy bank shares." ·
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