Mark Mobius: The financial crisis was real in the banking system but not in the industrial economy. It impacted the economy because the banking system froze. However, markets are leading indicators and they are telling us the recovery is on the way now.
Chinese stocks have already gone up a lot and they will correct downwards but that will be temporary.
Inflation is good for equities but not for bonds because bond rates must go up. Depending on how fast the money supply brakes are applied then the impact on equities could be positive or negative.
Gold has probably already discounted a lot of inflation expectations but when hyperinflation hits then gold could move much higher.
Money supply has had fed the markets. Excess money supply begets inflation and that is what could go wrong but that is something we don't have to worry about for probably another year.
The Business Times
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