Investors must digest the health data, gauge the impact on growth and earnings and, most importantly, keep their emotions in check.
Strong consumer confidence in the US and monetary policy easing by central banks bodes well for stock market performance next year. However, economic and political uncertainty, budget deficits and corporate debt remain risks to watch.
The news tends to follow trade wars and reports of downgraded growth, but we should look at technological disruption. Economists and the IMF are starting to draw attention to its impact on labour markets and the challenges of responding.
Trade war is bad for the world economy but, even so, there are winners: Southeast Asia, CPTPP members, suppliers of digital services and financial services, and multinationals with strong and flexible supply chains. How do they do it?
There are three scenarios investors can take – one optimistic, one dark and one ‘cowardly’, in which rates hover around 1.5 per cent. For the time being, companies look comfortable taking on debt, which means the latter option is still the best bet.