A strong recovery in stocks

After a torrid summer, equities have made a rapid recovery. October is often a bad month for markets, but for pan-European stocks, which gained 8.3%, it proved the best month since July 2009. American stocks had their best month in four years, clawing back the ground lost in the summer, while the FTSE 100 gained almost 5%, its best month since July 2013.

What the commentators said

As the jitters have subsided, emerging markets and commodities that partly depend on the Middle Kingdom have recovered too. But the bigger theme here is that several central banks have either announced or hinted at yet more monetary loosening, noted FT.com, and liquidity always bodes well for stocks.

European Central Bank President Mario Draghi has struck a dovish tone of late; the Bank could step up its quantitative easing (QE), or money-printing, programme, as soon as December. Sweden's central bank has just boosted its QE programme. And the US Federal Reserve has put off a first interest-rate rise in almost a decade amid global turbulence and weaker US data.

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Beyond easy money, there is certainly little to be bullish about, said Buttonwood in The Economist. Global growth has eased, making it more difficult for American firms to keep up their solid profit increases of recent years. Third-quarter sales and earnings are expected to be 3% and 4% lower respectively once all the companies in the S&P 500 have reported. Europe is looking pretty lacklustre too. Third-quarter earnings there are set to be 5.4% down on the year.

For the past six years, "we have had a repeating cycle", said Authers. The US economy has been strong enough to keep growing, but weak enough to need more easy money. Now this "Goldilocks on ice" scenario appears to apply to the rest of the world. The even bigger picture is that central-bank action continues to make up for shaky fundamentals, a pattern we have seen far too often in the past 15 years.