Markets 'exaggerating' risk of slowing growth in Western economies

Stronger growth in industrialised economies

Financial markets and economic variables do not move in straight lines; they are all beset by degrees of randomness. The problem arises when volatility becomes greater than normal, writes Cazenove Capital's Richard Jeffrey.

The brain learns quickly to disregard low-level noise; but more extreme noise is harder to ignore and can be very distressing. While I do not believe recent volatility in financial markets is simply noise, it is questionable whether it warrants some of the more hyperbolic newspaper headlines we have read. It is always important to look at unexpected moves in financial markets and ask: should they cause us to alter our view of the world or are they a reflection of unwarranted anxiety? On the one hand, it is all too easy for conviction to become a stubborn refusal to accept being wrong....