Financial markets suffer despite stimulus programmes

Financial Events

stocks Sept12.pngThe blog’s 6-monthly review of global financial markets highlights some interesting developments. It began 4 years ago, and was followed by the co-ordinated G-20 stimulus programme in March 2009. This ran out of steam by April 2011, leading the blog to launch its IeC Downturn Alert.

The slide above shows market performance since then. The period covers the €1tn ($1.4tn) LTRO programme from the European Central Bank, and the US Federal Reserve’s Operation Twist, as well as more recent announcements of further market support:

• The 4 BRIC countries (Brazil, Russia, India, China) are worst performers
• Russia (lilac) is down 28%; China (blue) down 27%
• Brazil (pink) is down 12%; India (orange ) down 7%

• Japan, UK and Germany are also all negative
• Japan (purple) is down 10%; UK (red) down 5%; Germany (green) down 4%
• Only the US stock market (dark blue) is positive, up 5%

• The big winner has been the US 30 year bond (dark green), up 36%

Three conclusions stand out from this.

One is that the export-development model of the BRIC countries is under great pressure. They took a seeming ‘short-cut’ to GDP growth by focusing on exports at the expense of domestic demand. Now the ageing of the Western BabyBoomers means that demand is disappearing, probably forever.

The second is that the unprecedented stimulus programmes in the West have not worked. As the blog will discuss tomorrow, the balance sheets of the major central banks are now are unprecedented levels. But they cannot create demand when people don’t want to buy.

One final conclusion is that people do want to save, with a ‘safe’ government. The JUUGS (Japan, UK, US, Germany, Switzerland) continue to be the destination of choice for investors. They now clearly prioritise return of investment versus return on investment.


US jobs, auto sales still below pre-Crisis levels


The above 2 charts show US jobs and car sales on a monthly basis, side by side. ...

Learn more

Central bankers fail to learn the Wellington lesson


‘Masterly inactivity’ was Wellington’s policy in his successfu...

Learn more
More posts
Economic risks rise as the lockdowns end

It is now 13 years since I wrote the first post here, in June 2007. A lot has happened since then: ...

China’s property sector is at the epicentre of the crisis

A branch of Centaline Property Agency in Hong Kong © Bloomberg Indebted Chinese property developers...

“They may ring their bells now, before long they will be wringing their hands”

The wisdom of Sir Robert Walpole, the UK’s first premier, seems the only possible response to ...

Will stock markets see a Minsky Moment in 2020?

Few investors now remember the days when price discovery was thought to be the key role of stock mar...

Chart of the Decade – the Fed’s support for the S&P 500 will end with a debt crisis

Each year, there has been only one possible candidate for Chart of the Year.  Last year it was the ...

$50bn hole appears in New York financial markets – Fed is “looking into it”

Most people would quickly notice if $50 went missing from their purse or wallet. They would certainl...

China’s renminbi and the global ring of fire

China’s property bubble puts it at the epicentre of the ring of fire © Reuters  China’s de...

Stock markets risk Wile E. Coyote fall despite Powell’s rush to support the S&P 500

How can companies and investors avoid losing money as the global economy goes into a China-led reces...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more