Investors Have Reason For Caution But Not Panic

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Human Events:

The economic numbers reported around the world during the last few weeks have given investors reason for caution but not for panic.

A key concern is economic growth in Asia, which has special importance since it possibly has been the strongest part of the world’s growth lately. A slowdown in China’s economic growth is a reason for concern among investors, along with questions about whether the predictions by some observers that current economic doldrums in Europe could linger for years.

China’s service sector growth slowed in April to its lowest point since August 2011 to give a clear sign that the world’s second-biggest economy may not provide the buying stimulus that many observers are looking for to propel global economic growth. Specifically, the HSBC services Purchasing Managers’ Index (PMI) for China fell in April to 51.1, down from March’s 54.3, with new order expansion slipping to its weakest mark in 20 months and staffing levels in the sector dipping for the first time since January 2009.

That cautionary report occurred as a number of economists warn that easy-money policies around the world are creating an artificial bubble that ultimately will burst. Central banks in the United States, Europe, Asia and Latin America have reduced interest rates to or near record lows. Indeed, scant room exists to cut rates much further and that policy is giving an artificial boost to the valuations of other assets.