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Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

The writer is the head of the Queens College, Cambridge, a consultant for Allianz and Gramsi

Financial markets have witnessed a dramatic change that turns on the consensus deals that dominated until early February this year.

For other countries, stocks in the United States and their performance reflect a remarkable shift in investor opinions on the economic expectations of America and Europe-and to the lowest limit China. What is less clear is whether the mixture caused by all of this is favorable or unfavorable in the long run. This is a lot for global well -being, inflation and financial stability.

Three major factors support the last 180 -degree shift in the opinions of consensus on stocks, bonds and currency: the increasing concerns of the American economy; The potential “Sputnik Moment” in Europe is driven by a possible change in Germany on European financial policy and finance; And hints of a more specific policy response than China. The faithful belief in the American exceptional has been eroded not only in terms of decrease in shares in the United States, but also the revenues of bonds that decrease the fears of growth and weakening the dollar.

After dealing with a whiff of recession, Markets They suffer from ancient -style good growth due to a large bout of American policy fluctuations. The uncertainty related to the definitions of the main commercial partners and their allies in America, such as Canada and Mexico, have doubled due to concern about the impact on the employment and income of continuous cuts in the public sector.

US government officials argue that these “turmoil” must be seen as part of a rugged journey to a much better destination – one of the most fair international trade, the efficiency of the great public sector, reduce financial domination, and unleashing entrepreneurship and activity in the most powerful private sector. In fact, according to them, it is a matter of time only before the same journey improves due to low energy prices, tax discounts and major disruption.

Anxiety is that the rugged journey may lead to a different and less convenient destination. The last match of the inability to predict in the United States risk stealing the United States from the important and distinctive “edges”-the long-term investor’s confidence in policy and decision-making.

American policy is also responsible for the sudden change of markets around Europe, which now sees the possibility of the dramatic economic policy. Germany is vibrating in America with America’s treatment of long security alliances and a change in its policy in Ukraine, suddenly considering relaxing its long financial restrictions. This can be translated into increased defense spending, investments in the largest infrastructure and greater regional financing.

Meanwhile, China indicates a move towards a more effective mixture of stimulation and repairs. The markets believe that this is necessary to counter the increasing threat to clarify the Chinese economy that has been highlighted again Data Sunday with both consumer and producer prices in February.

On paper, this meeting provides potential scenarios of rapprochement between what was previously previously (the United States), the bad (China) and the ugly (Europe) of the global economy. You expect optimistic opinion the rapprochement of global growth, as Europe and China are accelerating to approach the exceptional performance so far for the American economy. This will increase the level of global growth in general, as the slow -term slowdown in the United States is more than its compensation by the Beic Abe in China and Germany.

Pingle expectations will be a declining rapprochement. This scenario will be due to the delay in implementing Germany’s policy; China’s continuous struggle for budget of motivation and reforms; The American economy slows down towards the speed of procrastination amid low consumer confidence, job security, waiting and vision approach to companies in investment, and stagnant pressures for definitions.

Although it is still not clear the path that the global economy will take, the levels of absolute and relative prices in the markets indicate a little more flexible expectations of a long -term convergence. This means believing in Europe’s ability to overcome financial self -deficiency, China’s ability to move in the challenges of politics and the flexibility of the American economy despite its current turmoil. The bet is that the global economy is still likely to escape the clutches of recession and achieve a more balanced and sustainable growth path. We must all hope that this is true.