Michael McKenzie from London
Regardless of the ambiguity of many of the current economic data, and although the road to a trade solution between Washington and Beijing is a long winding road, it is quite clear that the mood of financial markets has now changed: the threat of a hard landing for the global economy is behind us, and a recovery is looming.
But the extent and scope of the economic recovery in 2020 are still points of speculation to a large extent. Saudi stock market sentiment ultimately requires a significant recovery in business investment, which in turn will lead to a global economic recovery. Evidence of such a rise may not come until the spring of next year at the earliest.
November gave some evidence that the worst slowdown in growth was behind the global economy, while reports of ongoing US-China trade negotiations suggested that both sides could make a lot of gains if a deal were signed. As a result, global bond yields rose to their highest levels in more than three months, with the return of the proceeds of the ten-year bonds in France above zero for the first time since July.
Record highs in different stock markets are characterized by a large rotation between sectors and regions. Tended leadership for the benefit of cyclical sectors dominated by improved performance when economic activity is stronger. The so-called "valuable" stocks - represented by global financial companies, badly hit by negative interest rates in Japan and Europe, then fears of summer recession are getting stronger.
Stock markets in Europe and the Asia-Pacific region with their significant weights in financial data and value stocks outperformed even Wall Street's record-breaking. Investors ignore quarterly results showing lower profits for each of the "S & P 500" and "Stokes 600", preferring to focus on a brighter outlook for the next year.
The shift in mood is illustrated by a 25 percent rise in the Caterpillar share price last month. Heavy machinery maker, which is often seen as a gauge of the global industrial economy, was this year at a low of nearly 7 percent in early October. That was before the company reported disappointing earnings and reduced its guidance for the full year. Regardless, the stock hit a 52-week high this week. According to one investment manager, the company's return to recovery tells us that earnings and recession fears were exaggerated. The pendulum is returning to its previous state.
Another idea is that brighter signs on trade mask a stronger impetus for longer-term bullish sentiment: fiscal stimulus expectations. Certainly, the largest government spending is on the UK economy's agenda as well as the stock market agenda, which has been largely ignored by foreign investors, who have preferred British government bonds since the Brexit referendum in 2016. It is not difficult to provide justification for a shift towards stocks and exit, of government debt at a time when the Ministry of Finance increase spending in 2020.
On the other side of the Channel, the recent performance of European equities and periodicals also partially reflects expectations of increased government spending even from reluctant Germany and the growing recognition from some policy-making circles of the harm caused by negative interest rates.
Not everyone is convinced that this marks the beginning of a radical change in investment strategies that have become dependent on quality bonds and equities. Moderate economic growth trends in mature economies and slowing momentum across the emerging world seem solid.
David Bianco, senior officials of investment in the Americas, says "DWS" asset management company, they and his colleagues are still finding it difficult to "abandon their preference for long-term profitable growth stocks for the value of cyclical stocks."
As a clearing center for information and investment decisions are endless, the markets generate a lot of noise and sometimes misleading signals. Responding to the right signals is a challenge for investors when they rearrange their portfolios for next year.
