Here’s what really matters for markets in 2020

The current geopolitical turmoil is making headlines. But it isn’t particularly significant for investors, says John Stepek. What matters more is how accommodating central banks plan to be.

Andrew Bailey takes over as governor of the Bank of England in March.
(Image credit: 2019 WPA Pool)

I’ve spent a lot of this week pointing out that the conflict between the US and Iran is scary, but probably not that important for markets.So if geopolitical turmoil isn’t particularly significant for investors, what is? If tidings of war and promises of strife don’t matter, then what does? I hate to say it, but it’s the same old, same old – it’s all about how accommodating central banks plan to be.

You’ll often hear that central banks are “out of ammo” or that their effect on markets is overstated. Neither is true. Forget the “zero bound” – you can always make monetary policy looser. You just print it. And as long as you can get it out there – and central banks can – then it’ll go somewhere. It may or may not do much for the underlying economy. But when it comes to markets, as Eoin Treacy of FullerMoney puts it: “The simple fact is monetary policy beats most other factors most of the time.” So given that they’re so important, the question for investors is: what are central banks planning this year?

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.