What are the markets really afraid of?

The recent surge in stock market volatility has been blamed on fear of inflation, says Brian Durrant in the Fleet Street Letter. But markets aren't actually behaving as if inflation is a threat. In fact, investors appear to be more afraid of an economic slowdown, brought on by the Federal Reserve raising interest rates too far. And he believes that could present a buying opportunity...

After the shake-out starting last month, the investment community is deeply divided. In one camp sit those who believe the markets have much further to fall. Buying shares amid the current turbulence is as dangerous as trying to catch a falling knife, they think.

On the other hand, the bulls say equity looks a glaring buy. Consider valuation yardsticks such as the price / earnings ratio. The FTSE 100 index is on a historic multiple of 13 times earnings hardly demanding, and lower than the P/E ratio at the bottom in March 2003.

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Brian has contributed to MoneyWeek with his expertise in investment strategy, for example how to quadruple your dividend income and how to navigate through the stock market in the 2008 financial crisis. He’s also touched on personal finance such as the housing market and the UK economy.