THE HINDU Editorial Vocabulary- January 5, 2018 - Topic 2

On a high

The US Federal Reserve

Global stocks kicked off the new year by rallying to reach new lifetime highs. Major indices across the U.S., Europe, and Asia witnessed significant gains in the year’s first two trading days; the Indian bourses were slower to gain traction. The strong start suggests that stocks may be all set to carry on their momentum from 2017, which saw major indices offering solid double-digit returns to investors. 

A significant feature of the present bull market in stocks has been its broad-based participation, with both developed and emerging markets benefiting from it. The S&P Global Broad Market Index, for instance, rose by an impressive 22% during the year. Indian stocks are among the biggest winners of the rally. Macroeconomic tailwinds such as improving economic growth in the U.S., Europe and emerging markets, better corporate earnings, and tax reforms passed by the Trump administration could explain some of the euphoria. But the extreme broad-based nature of the rally adds to fears that it may be driven primarily by excess fund flow into stocks rather than a secular improvement in economic fundamentals. The weakening of the U.S. dollar during 2017, along with the strengthening of emerging market currencies like the Indian rupee, raises further suspicion that the global stock rally may be about nothing more than excess liquidity. Investors starved of yield have been happy to bid up stocks in countries like India and China.

The major risk facing the present bull market, of course, is the prospect of a quicker end to the accommodative monetary policy adopted by the U.S. Federal Reserve. After all, the dovish monetary policy since the global financial crisis of 2008 has clearly played a major part in fuelling the second-longest bull run in U.S. market history. With the return of higher economic growth in the U.S., inflation is bound to spike up and force the next Fed chair to raise rates at a faster pace. Apart from deflating the rally in domestic U.S. stocks, this is also likely to improve the yield on American assets and cause capital to flow out of emerging markets. In addition, any repatriation of dollars by U.S. corporations, which are incentivised by the new corporate tax policy, is likely to exert pressure on non-dollar currencies. Meanwhile, the price of gold — a safe haven asset — rallied 14% last year, which is the metal’s best performance since 2010. This suggests that investors in at least some corners of the market believe the end may be near for loose monetary policy. The ‘taper tantrum’ of 2013 had served as a timely warning to emerging markets about the fickle and disruptive nature of global capital. While predicting market trends is a fool’s errand, it seems the end to this bull market might be sooner than later.

Vocabulary

Significant: sufficiently great or important to be worthy of attention; noteworthy.

Example: A significant increase in sales

Synonyms: notable, noteworthy, worthy of attention, remarkable, important

Antonyms: inconsiderable, trivial, slight, fragile, hole-and-corner, flimsy, meaningless

Traction: the extent to which a product, idea, etc., gains popularity or acceptance.

Example: Analysts predicted that the technology would rapidly gain traction in the corporate market

Synonyms: clutch, grip, traction, bag, clench, bobby pin, travelling bag

Momentum: the impetus gained by a moving object.

Example: The vehicle gained momentum as the road dipped

Synonyms: pulsing, whim, nerve impulse, nervous impulse, impetus

Participation: the action of taking part in something.

Example: Participation in church activities

Synonyms: involvement, part, contribution, association

Antonyms: non-involvement, nonparticipation, non-engagement

Impressive: evoking admiration through size, quality, or skill: grand, imposing, or awesome.

Example: An impressive view of the mountains

Synonyms: magnificent, majestic, imposing, splendid, spectacular, grand

Antonyms: ineffectual, unimpressive, uneffective, ineffective

Tailwind: a wind blowing in the direction of travel of a vehicle or aircraft; a wind blowing from behind.

Example: A tailwind had brought the aircraft into the airport quicker than expected.

Synonyms: air current, Current of air,  Wind.

Antonyms: headwind

Starve: suffer severely or die from hunger.

Example: She left her animals to starve

Synonyms: lust, hunger, famish, thirst, crave, starve

Antonyms: give, be full, feed

Repatriation: the act of returning to the country of origin

Example: Bangladesh and Myanmar make repatriation agreement for Rohingyas

Synonyms: repatriated, return, repatriating, patriation, resettlement

Exert: make a physical or mental effort.

Example: He needs to exert himself to try to find an answer

Synonyms: strive, try hard, make an/every effort, endeavor, do one's best

Tantrum: an uncontrolled outburst of anger and frustration, typically in a young child.

Example: He has temper tantrums if he can't get his own way

Synonyms: fit of temper, fit of rage, fit, outburst, pet, paroxysm, frenzy

Errand: a short journey undertaken in order to deliver or collect something, often on someone else's behalf.

Example: She asked Tim to run an errand for her

Synonyms: task, job, chore, assignment, collection, delivery, mission, undertaking

Disruptive: causing or tending to cause disruption.

Example: Disruptive and delinquent children

Synonyms: troublesome, unruly,rowdy, disorderly, undisciplined

Antonyms: quiet