![]() This Isn’t the First Massive Market Shockīut take a closer look at the episodes listed above. It would be foolish to declare that the coast is clear. Higher energy prices, rising global yields and roughly two years’ worth of global central bank tightening are filtering down to economic activity with a lag. Today, inflation and its knock-on effects are challenging economic growth. While we agree that there is plenty of uncertainty, bad conditions are what drive sell-offs, and their underlying circumstances are often different when they occur. Skeptics might argue that conditions today are extraordinarily bad. Five and 10 years later, investors also enjoyed handsome gains. From the low point in eight US market downturns of more than 20%, equities delivered a 51.1% forward return after one year on average, and a three-year return of 82% ( Display). Following sharp US market declines since 1950, equities typically roared back with gusto. Both conditions have been present this year.īut what happens after a drawdown is encouraging. This process can be volatile, especially when share prices in parts of the market are unreasonably high and when the earnings outlook is extremely uncertain. That’s why market downturns are commonly known as “corrections.” Share values are reset to better reflect a company’s long-term earnings expectations. But they often set the stage for a healthier recovery. Severe stock market drawdowns are always unsettling. Setting the Stage for a Healthier Recovery Outside the energy sector, there have been few places to hide in equity markets, with sharp declines across Europe, Asia and emerging markets. Despite recent gains, the S&P 500 was down by 15.1% this year through November 15. Stock market volatility continues to rage, even after recent glimmers of hope. Patient investors can find comfort knowing that strong recoveries are common after sharp drawdowns. Wheat ending stocks in 2019/20 are forecast to rise to 270Mt from 264Mt current year.After a tough year for equities, is a recovery imminent? While nobody can predict when the market will bottom, we do know what happened after sharp downturns in the past. Wheat area higher Australia, EU and Black Sea regionĪustralia is expected to lead this year’s recovery in wheat harvested area (Chart 1) followed by Russia, Eurpoean Union, Ukraine, Turkey and the United States, the world total harvest wheat area predicted the highest in three years reaching 220 million hectares.Ĭombined with a small lift in yields, 2019/20 world wheat production is forecast 759Mt, compared with 735Mt current year, 763Mt in the 2017/18 and 757Mt in the 2016/7 crop years. ![]() IGC said the anticipated rise in total grains production in 2019/20 would only just compensate for smaller beginning stocks and assumed a solid increase in global consumption would leave total grains ending stocks reduced to 575 million tonnes (Mt) from 604Mt current year, 648Mt ending 2017/18 and 659Mt year ending 2016/17. THE FIRST full set of grain supply and demand projections for the 2019/20 crop year sees a further closing-stock drawdown at the end of 2019/20 entirely attributed to three consecutive years of maize production falling and consumption increasing, according to International Grains Council (IGC) estimates published today. ![]()
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