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Gary Shilling

The Coming Storm for Global Financial Markets

Market prices don't reflect economic fundamentals. That's worrying.
Nervous? She should be.

Nervous? She should be.

Photographer: DANIEL LEAL-OLIVAS/AFP/Getty Images

Global growth is weak, and will be eroded further by Brexit. Oil prices are low, and likely to plunge further. The world has excess capacity and a wage-depressing labor surplus. Corporate profits are shaky. And deflation is laying bare the impotence of central banks. So where would you logically expect financial markets to be going, given that economic, financial and political environment?

You’d expect to see increased demand for safe-haven U.S. Treasuries, a soaring dollar, falling commodity prices, and increasing investor aversion to junk bonds, emerging market debt and equities and other low-quality securities. But that’s not the case.