• Many pundits and investors are coming to the realization that we live in a world in which there is too much of too many things. There is too much debt of course, but also too much labour (as paradoxical as it may seem in an ageing world) and too much capital. This unholy alliance is the reason why the next few years, and possibly decades, will consist of an economic environment characterized by low growth, low inflation, and as a consequence low interest rates.
• This supply glut also applies to most commodities, ranging from cotton to iron ore. Prices may fall further before coming back up again. Take oil for example. The consensus in the market (with the exception of the oil majors) is that its price will go back to USD100, with a few bounces here and there. But (1) OPEC now appears impotent, (2) US shale output will soar back as soonaspricesrise,and(3)bothIranandIraqcould soon also boost their output. In such conditions, a lower oil price in the USD 40-50 range is not an outlier. This would transform a commodity shock into a credit shock, which would then mutate into a market shock.
• If only one statement could capture the mood at the recent IMF / WB Annual Meeting, it would have to be C. Lagarde’s observation that current economic performance is “just not good enough”. The IMF now estimates that growth in potential output in the rich world will not exceed 1.6% per year between now and 2020 (versus 2.25% before 2008). In emerging markets (EM), the deceleration will be even sharper: 5.2% per year versus 6.5% over the past 7 years.

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