Monetary Easing, Government Stability, and Stock Market Returns: What’s the Connection?

As President Trump continues to push for the Chairman’s removal (within the next eight months, reportedly) and lower interest rates, my Paris-based researchers uncovered this recent study which found that, during easing cycles, higher government stability – as measured by our ICRG risk methodology – “is paradoxically linked to weaker stock market performance.”

The study adds: “This may reflect the idea captured in Warren Buffet’s famous quote: “A rising tide floats all boats… only when the tide goes out do you discover who’s been swimming naked.”

Phrased differently, “the quality of institutions might not be as visible during times of abundant liquidity and favorable market conditions. It is during periods of financial and economic stress that the true importance of strong institutions becomes apparent.”

Have a look when if you have some time. (https://www.ideasforindia.in/topics/macroeconomics/uneven-resilience-why-some-emerging-markets-better-navigate-us-monetary-policy-cycles.html)

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