On one level, the outlook for investment markets right now is simple. If you believe the global economy will spiral down into another recession, then shares and growth assets are likely to struggle. Alternatively, if you believe that global policy makers will be successful in keeping the global economic recovery going, then a sharp rebound is likely at some point.
The US Federal Reserve (the Fed) has now clearly indicated that it will ease further unless the US economy improves. Our assessment is that the Fed will announce another round of quantitative easing in September. Likewise in Europe, there is increasing evidence the recession is deepening as excessive bond yields in Spain and Italy serve to hamper monetary policy and threaten the euro, which seems to have galvanised the European Central Bank (ECB) towards more aggressive action. But will it work?