The hottest word in finance right now is “stabilizing,” and the hottest trend is complacency.
Commodities prices aren’t rallying back to levels that seemed normal this time last year — they’re stabilizing.
China isn’t showing signs that painful reforms are raising its long-run growth prospects — it’s stabilizing, enjoying a calm before those reforms have even started to make an impact.
Emerging-market economies aren’t showing signs of major growth — they’re stabilizing. That’s been good enough for global investors to start pumping money back into them.
Things are stabilizing not because they’re getting better, but simply because they haven’t gotten worse yet. The long-range problems facing the global economy remain real: Brazil’s economy is uncompetitive, nobody wants to buy China’s steel — or anyone else’s commodities, for that matter — and the US faces growth challenges.
We haven’t found a bottom, just a sickly new normal as the world waits for some meaningful change, likely for the worse.
We’re in the calm before the global storm, and everyone is pretty blasé about it.