As global recession warnings sound, markets hit the afterburners
By Marc Jones
LONDON Oct 7 (Reuters) - Like bulls in a China shop, financial markets have gone on the rampage just as predictions of another global recession gain ground and talk swirls of a lost decade in Beijing.
Having taken a 13 percent battering over August and September, MSCI's 45-country world stock index has clawed back exactly half of that in an astonishing turnaround this week.
It seems particularly odd timing, coming as renowned Citi economist Willem Buiter warns China could drag the world back into a two- or even three-year recession and Societe Generale flags the dangers of a Japanese-style decade of stagnation.
Hard data has also taken a clear turn for the worse.
Even ignoring China, industrial output in Germany, probably the most connected of world's big economies due to its high-end machinery and car exports, is at its lowest in a year.
The last set of U.S. jobs and manufacturing numbers were unambiguously grim, Europe's main high-flyers Britain and Spain have started to lose altitude, Russia is reeling and the IMF has just forecast a pan-Latin American recession this year.
So why the sudden market rally?
It makes perfect sense to buy stocks, currencies or commodities when they are cheap. But traders will also argue that markets always price in in real time what official statistics only show later. Continuación...