A RARE surge of optimism is running through financial markets. For most of the year America’s high inflation has proved troublingly persistent, Europe’s energy crisis has threatened a deep recession and China’s economy has been plagued by covid-19 lockdowns and a property bust. Investors are now cheering developments on all three fronts. America’s annual inflation fell from 8.2% to 7.7% in October. Europe’s natural-gas prices are down by two-thirds from their peak in August. China has loosened some restrictions associated with its “zero-covid” policy and on November 11th unveiled measures to ease the financial pressure on embattled property developers. This flurry of news has sent global stocks up by 13% since mid-October, as traders priced in fewer interest-rate rises by central banks and caused the dollar to fall.
Alas, investors are getting ahead of themselves. America’s inflation is coming down because…
