Two questions, at least, are on investors’ mind at the moment. Is the synchronised global upturning turning into a synchronised slowdown? Will the dollar rally be sustained, and if so, will it spark further stress in emerging markets and in the global economy? You would be hard-pressed to argue that the global economy is slowing dramatically, at least based on the most recent headline data. My estimates suggest that global GDP growth was unchanged at 2.9% year-over-year in Q1, thanks mainly to a slight 0.3 percentage point rise in U.S. growth to 2.9%. That said, this number includes the 6.8% headline in China, which no one believes, and we still don’t know what happened in Japan. Finally, this number masks the fact that momentum in Europe slowed across the board. Growth in the euro area is still solid, but it slowed sharply in Q1. And the first indications for Q2 do not promise much in the way of a rebound. After growth of nearly 3% last year, all evidence so far points to somewhat slower growth of 2% in 2018. The picture is even grimmer in the U.K. where growth slid to a five-year low of 1.2% in Q1. Looking beyond the GDP numbers, leading indicators are discouraging, but not yet in panic territory.
Read MoreInvestors were forced to endure further distractions at the hands of Brexit and the new U.S. political leadership last week. Theresa May's speech, which lifted the lid slightly on the government's plans for its exit from the EU, and Mr. Trump's inauguration address were undoubtedly the most important events for markets. This tells you all you need to know about how it is to be an investor at the moment. Fear not, though; I am here to help. I won't talk about Mr. Trump or Brexit in this post, but instead ask the question of how equity investors can escape their vortex.
Read MoreThe melt-up, and break-out, in the U.S. stock market recently is a classic case of the market once again climbing the wall of worry in a convincing fashion. Political and economic uncertainty has surged. Trump is now real contender, the Brexit limbo persists, Italian banks are on the brink, and Turkey is wobbling. But the mighty S&P 500 has no time for such petty headwinds, as low yields press investors to seek returns in the equity market. We have seen this movie before, and it ends badly eventually, but it could go on for a while. This is especially the case if investors are starting to discount that EU politics are about to get really ugly.
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