Carmignac's Note

Investors have remained optimistic, both because they believe the global economy is still growing at a decent clip (though things look a bit shakier of late in the United States) and because they have lost none of their faith in the wisdom of central banks.

The French election didn’t deliver the deathblow to the European integration process after all, which means that financial market exuberance can be expected to hold up for a while.

The British equity market has gained 20% since the referendum on 24th June resulted in favour of Brexit. The S&P 500 is up 9% since Donald Trump was elected President of the United States.

After observing that every new political twist and turn in 2016 fed into a gradual drift towards fiscal interventionism and prompted central banks to reaffirm their accommodative monetary policies, the financial markets have since been having a field day with what is clearly the strongest cyclical recovery since the end of the Great Recession.

As we indicated last month , the global business cycle gradually recovered in the course of the year from the low it hit in the first quarter of 2016, before getting a further, undeniable boost in November from Donald Trump’s unexpected win at the polls.