Time to get bearish?

Probably not.  Many commentators are quite negative about the global growth outlook for next year, but the leading indicators aren't actually that bad.  We had a significantly better than expected US Employment report on Friday which will give a boost to the consumer portion of the US economy. And Capital Economics have just released a note titled "Six reasons for optimism about the world economy".

They see:

  • No sign of a sharp downturn in business surveys.  October global PMI has ticked up and and is higher in 2015 than in 2013 and 2014
  • Monetary aggregates are growing strongly, indicating broad economic activity
  • fiscal austerity is fading
  • the full benefits of lower commodity prices have not been felt yet
  • key emerging market economies are showing signs of improvement
  • financial markets are calmer, and in particular not overly stressed about a Fed rate hike

Our long run market value indicators are consistent with his view.  We don't yet see markets as being overstretched.


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