The IMF Is Bullish on the Global Economy. But Wait, What’s This?

30
IMF Is Bullish on the Global Economy - IMF Growth Forecast
IMF Is Bullish on the Global Economy. But Wait, What’s This?

The IMF has just turned bullish on the global economy.

Everyone, now’s the time to buy stocks!

Heh, well…that’s according to the Australian Financial Review. They’ve headlined an article ‘IMF sees an end to global downturn’.

There’s a problem here, though…

Take just a moment to read the article and it doesn’t look as rosy as the IMF make out.

Here’s what I mean…

It’s just clickbait

The Australian Financial Review reports, ‘International Monetary Fund says the global economy’s 2019 trade-war induced slowdown may be coming to an end.’

Yep, that’s correct. The trade war may well be coming to an end…

The issue I have is that the IMF isn’t actually revising their 2020 and 2021 forecasts higher.

They’ve actually dragged them lower. I’ll tell you the reason why shortly.

Here’s the article. It made front-page news today…

IMF Global Economy - End to Downturn AFR Cover

Source: Australian Financial Review

[Click to open in a new window]

What you’re looking at above is a clipping from today’s paper.

The title to the left paints a very bright future.

So why did the IMF lower their growth targets this year and next?

Well…

It turns out, the global economy is increasingly vulnerable to the impact of a climate emergency.

The IMF is ‘urging governments to make greater strides to reduce carbon emissions and build green infrastructure.’ That’s according to The Guardian, anyway.

There’s a bit of humour in all this.

Before I show it to you, you’ve got to see what Gita Gopinath said…

‘[T]he climate risk was near and present and a major issue that demands that governments step up.’

Gita Gopinath is the IMF’s chief economist.

Anyway, let me show you why this is hilarious. Take a look at the article above.

Remember, this is front-page news today…

On the left, we have the screaming headline about the downturn bottoming.

Then to the right, we have ‘No zero emissions shift if it hits jobs: PM’.

Morrison salutes the IMF

Yeah…

Turns out, Morrison has other plans.

He’s got no intentions of reaching a zero-emission target if it impacts jobs.

Look, I don’t hold a personal opinion about climate change.

So this isn’t a debate about climate change.

But what I do understand about us humans is that we’re damn good at adapting.

We’re actually so good that in no time we’ll be living a lifestyle that totally supports this climate agenda.

It just takes a few people to get things moving.

And no, climate protestors aren’t the solution here. So, I’ll continue to ignore their plea.

Anyway. I want to show you the IMF’s revised targets.

It’s a chart, I’ll pop it below.

IMF Global Economy Growth Forecast

Source: The Guardian

[Click to open in a new window]

What you’re looking at above is the new guidance levels for the global economy.

It’s a rolling guidance and starts from 2018 and projects out to 2021.

As you can see, we are bottoming out. But what’s interesting is that the 2020–21 guidance levels have actually lowered.

And they could be lowered even further…

Look to sell when you see this

The IMF was quick to suggest that ‘further deterioration in economic relations between the US and its trading partners, or in trade ties involving other countries, could undermine the nascent bottoming-out of global manufacturing and trade, leading global growth to fall short of the baseline.’

What the IMF is basically saying is that, if nothing changes from today, we’re heading up.

But if we get one slip up in the US–China trade war…or even issues in Europe’s manufacturing…look out below.

Ha, they sure do have a good way of wording it.

It’s blue skies ahead for the IMF if nothing changes.

So, is now the time to buy stocks?

Well…as you’ve probably already seen, stocks can ‘climb the wall of worry’.

That’s a saying which just means that no matter how bad the news today, investors are willing to look to the future.

Could be worth doing the same. Always looking to the future…

Because for as long as there is a bit of bad news, stocks can march on higher.

The moment there’s a flood of positive news…it may be time to change stance. For now, we’ll just wait and see.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

PS: If you want to receive ongoing updates right to your inbox. Just click right here. Next time I’ve got something important to share with you. You can read it right in your email.