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Stocks edge higher
Most global stock indices paused for breath Friday but were still higher for the week.
As we look forward to 2016 and we think about the prospect for the European economy, I think we can expect to see a solid, but steady continued recovery. Now, against a lot of the scepticism about deflation and low growth, I actually think inflation might surprise on the upside – with wage growth being the swing factor. This will then move us on from the environment which has been characterised by fragility, and get a renewed sense of confidence in the European macro-economic picture, also supported by the recapitalisation of the financial sector.
But turning to markets, I think we can expect to see solid, but not spectacular returns, and when we look at some of the movements that will take place at the underlying stock level, as we edge towards this normal environment, we are likely to see some big winners, of course, but less good performance from the dull predictable bond proxy- like stocks, where some investors have been hiding in these uncertain times.