Equity markets have rallied hard, though nothing in Europe has been fixed yet and downside risks to the economy are rising. Recession in Europe looks unavoidable but the experience is likely to be less bad than in 2008.
The UK economy is muddling through, the US is gently recovering and China is showing signs of a soft landing. A gently rising oil price indicates the demand outlook is probably more robust than the prices of industrial cyclical shares reflect. Correlations in financial markets are high as the market whips the eurozone through its existential crisis but stock market prices will be set by fundamentals, not politicians. The corporate results season has been uneventful and Q3 results have been satisfactory. Though company outlooks are cautious, with some signs of modest margin pressure, ther...
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