A 30-year Long view | Charts that Count

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They’re gonna be taking the long view today this is gonna be my last video for the ft after almost 30 years and so what i’d like to do is to review world markets since i first joined the ft stuff back on new year’s day 1990 now if we start on this scale this is the msci all world stock index that includes all both developed and emerging markets emerging markets

Are of course a much bigger portion of the pie than they used to be that’s the red line meanwhile or the blue line here is the ten-year treasury yield it’s the single most important rate in world finance it effectively sets the notional risk-free rate for transactions across the globe and as you can see if you stands back it’s obviously greatly exciting to see

Changes and shifts on a weekly or a daily basis but over the shift of three decades the trends are very clear in the case of the world stock market the trend is plainly upwards with the occasional interruption and that’s not surprising because in the very long term stock markets tends to follow economic growth and in the long term economies tend to grow they

Don’t necessarily do it in conjunction with each other but in the long term economic growth drives stock markets what most motivated me while i spent most of my time covering during these years were however the times when the stock market stopped going up 2000s for the dot-com bubble and perhaps most spectacularly now at 2007 2008 with the very severe sell-off

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That followed the credit crisis most famously remembered by the lehman bankruptcy but again note both times those who bought at the bottom probably felt very much happier what was arguably more important and a much clearer trend that we didn’t report as much about was the much bigger market for bonds the trends in bond yields is about as clear as you could

Possibly ask it to be it is downwards one of the most famous and reliable trends in world finance the reason for that ultimately is that inflation came under control in the 80s always perceived to do and if you’re less worried about inflation then you need less of an interest rate – for future transactions as a result that ever cheapening money helps to support

The stock market and what you do see is that whenever there is an interruption to the trend or close to an interruption such as in their 1994 when alan greenspan surprised people by tightening rates or when the fed again raised rates err to try to curb the dot-com boom almost dramatically when you had a spike in yields ahead of the credit crisis it tends to mean

That stocks soon run into trouble now that is an issue because as you can see in the last few years it really does look as though that ever reducing trends the bond yields has finally come to an end it looks as though it’s flatlining and very gently starting to increase and early this year we got back through the 3% level round numbers do matter to psychology and

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What is interesting is that world’s stocks as a whole not the u.s. but the world stocks as a whole peaked back in january of this year and have not got back to that peak while bonds have been consolidating at a high level i suspect that over the next few decades i never got to cover a bond market that was doing anything other than steadily reducing i suspect my

Successes are going to have a great deal of excitement trying to work out what is going to happen if bond yields really start doing that again the what effect that will have on stocks and with that it just remains for me to say thank you for the unsung heroes greg and janelle who film and produce this and the unsung heroines joanna brooke and fan who produce the

Graphics from me that’s all folks

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A 30-year Long view | Charts that Count By Financial Times

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