- In the US the housing market is creating wealth and real incomes are no longer being eroded by soaring commodity prices.
- In the eurozone meaningful gains in competitiveness are occurring far faster than many economists predicted, resulting in increasing investment (predominantly from the auto industry).
- Japan is seeking to address its long term battle with deflation through a ¥10 trillion stimulus package and attempted devaluation of the yen.
For now, though, the global economy is digesting the 2% payroll tax increase for US employees stemming from the New Year's Day fiscal cliff deal. Furthermore, American businesses and consumers are pondering their economic future as sequestration looms. These factors are weighing on sentiment indices and depressing business investment. Forward-looking equity investors may be keen to discount the economic improvement now, but as far as the real economy is concerned, central bankers' actions (or inactions) remain crucial. More >
Head of Portfolio Strategy