"Our positive economic outlook for 2016 was pretty much correct and, at the end of the year, it looks as if markets reflected that growth with almost all major equity indices in positive territory.
The healthy economic growth of the UK and the US translated to the stockmarkets, outperforming the slightly more sluggish Europe and Japan. By the numbers, 2016 seems to have been something of a conventional year.
However, you would be hard-pressed to find anyone, inside or outside of financial markets, who’d agree with 2016 being ‘conventional’. The prevailing theme was the rejection of the status quo in almost all popular votes. A secondary impact is that being that ‘opinion pollster’ might not be the best thing to have on your CV.
In addition to Brexit and the rise of President Trump, we also saw a bank bailout in Italy, a second interest rate rise from the Federal Reserve, the return of Iran to polite global society, and new all-time highs reached in the Dow Jones and S&P 500 equity indices.
Almost all reviews of the year are looking to paint 2016 as a kind of turning point – for capitalism, for globalisation, for fixed income – the list goes on. In reality, it will be decades before anyone can even start to work out whether that is the case or not.
So rather than try to extrapolate the last year into a long term change in our world view, we will concentrate on the next twelve months – both the upcoming events and their possible interpretation by the financial markets."
Seven Investment Management (7IM)
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