5 Market Axioms Lose Reliability: Financial Times

Systemic changes are underway in markets, and spreading nationalism may put economic globalization on pause. Allianz economist Mohamed El-Erian warns that investors cannot depend on globalization expanding markets and efficiency, emerging economies catching up with advanced economies, robust liquidity stabilizing markets, policies limiting economic downturns, or governance supporting the global of law. “Each tenet is subject to considerable uncertainty, adding to the need to review medium-term investment approaches on account of accelerating technological innovations, climate change and demographic trends,” he explains. “The possibility of years of deglobalisation — where barriers reduce the free flow of trade and investment — remains substantial.” Investors can expect disruptions in development and foreign investment along with political influence over economic and monetary policies. Some investors benefit from volatility for now, but negative rates, increased risk-taking, bubbles, political instability, deglobalization and lack of respect for the rule of law pose long-term challenges for global markets. – YaleGlobal