“So long as wage growth, inflation and corporate spending remain subdued central banks may be tempted to keep interest rates lower for longer than current market expectations, a scenario that will leave many investors once more searching for dependable sources of income,” comments Russ Mould, AJ Bell Investment director, speaking at the 2014 AJ Bell Investival event. “Meanwhile the surge in the dollar, traditionally a haven asset, suggests markets have yet to fully recover their appetite for risk following October's stumble, when it took Japan's stunning increase in its quantitative easing (QE) programme to fend off fears of a deflationary downturn.”
Besides the dollar, there are several other useful indicators that investors can use to gauge both market sentiment and global economic progress. These include:
• The Dow Jones Industrials transportation index
• Sub-investment grade, or junk, bond yields, which can be tracked via exchange-traded funds
• The gold-silver ratio
• Emerging market and small-cap indices.
Notes for Editors
- The AJ Bell Investival takes place today at London's Millbank Tower. The event, attended by 300 IFAs, is being streamed live on YouTube and the agenda can be found at http://www.ajbellinvestival.co.uk/
- America stopped adding to its QE programme in October and prior halts in 2010, 2011 and 2014 all coincided with pull-backs in US and global stocks.
- Richard Russell's 'Dow Theory' argues America's 20-stock Dow Jones Transportation index is a key lead indicator for the better-known, 30-constituent Dow Jones Industrials benchmark. History shows if the Transports index is rising the Industrials tends to do the same, while the Industrials generally fails to progress if the Transports start falling.