We're going to be taking the long view today.
This is going to be my last video for the FT
after almost 30 years, and so what I'd like to do
is to review world markets since I first joined the FT staff
back on new year's day 1990.
Now, if we start on this scale - this is the MSCI all-world
stock index that includes all both developed and emerging
markets.
Emerging markets are, of course, a much bigger proportion
of the pie than they used to be.
That's the red line.
Meanwhile, the blue line here is the 10-year Treasury yield,
the single most important rate in world finance;
it effectively sets the notional risk-free rate for transactions
across the globe.
And as you can see, if you stand back,
it's obviously greatly exciting to see changes and shifts
on a weekly or a daily basis.
But over the shift of three decades,
the trends are very clear.
In the case of the world's stock markets,
the trend is plainly upwards with the occasional
interruption and that's not surprising
because in the very long term, stock markets tend
to follow economic growth and in the long term
economies tend to grow.
They don't necessarily do it in conjunction with each other,
but in the long term economic growth drives stock markets.
What's most motivated me, what I spent
most of my time covering during these years,
were, however, the times when the stock
market stopped going up.
The 2000s for the dotcom bubble, and perhaps most spectacularly,
2007, 2008 with the very severe sell-off that
followed the credit crisis, most famously
remembered by the Lehman bankruptcy.
But again, note both times those who bought at the bottom
probably felt very much happier.
What was arguably more important and a much clearer
trend that we didn't report as much about
was the much bigger market for bonds.
The trend in bond yields is about as clear
as you could possibly ask it to be.
It is downwards.
One of the most famous and reliable trends
in world finance.
The the reason for that ultimately
is that inflation came under control in the 80s
or was perceived to do, and if you're
less worried about inflation then you
need less of an interest rate for future transactions.
As a result, that ever-cheapening money
helps to support the stock markets, and what you do see
is that whenever there is an interruption in the trend
or close to an interruption, such as in 1994
when Alan Greenspan surprised people by tightening rates,
or when the Fed again raised rates
to try to curb the dotcom boom almost dramatically when you
had a spike in yields ahead of the credit crisis
it tends to mean that stocks soon run into trouble.
Now that is an issue because, as you
can see, in the last few years, it really
does look as though that ever-reducing trend for bond
yields has finally come to an end.
It looks as though it's flatlining and very gently
starting to increase.
And earlier this year, we got back
through the 3 per cent level.
Round numbers do matter - it's psychology.
And what is interesting is that world stocks as a whole,
not the US, but world stocks as a whole,
peaked back in January of this year
and have not got back to that peak
while bonds have been consolidating at a higher
level.
I suspect that over the next few decades
- I never got to cover a bond market that
was doing anything other than steadily reducing
- I suspect my successors are going
to have a great deal of excitement trying to work out
what is going to happen if bond yields really start doing that
again, and what effect that will have on stocks.
And with that, it just remains for me
to say thank you for the unsung heroes Greg and Donelle,
who film and produced this, and the unsung heroines, Joanna,
Brooke, and Fran, who produce the graphics.
For me, that's all, folks.