Global Bull Market: Still Not Loved and Still Not Over
There’s some evidence of capitulation by longstanding bears, making us ask whether we need to revise our ongoing contrarian – and correct – expectation for continued and accelerating growth and strong equity performance. We find the seeming capitulation to be mostly just more bearishness, and we see a continued unfolding of the global “turning” toward the pro-growth devolution of power from central authorities to local authorities and individuals. Brexit continues to catalyze pro-growth change throughout Europe. Macron has liberalized labor markets, and is poised to cut taxes. Merkel has had to listen to the right, and limit potentially illiberal Muslim immigration. Japan is electrified by the threat of North Korean nuclear capacity. China has learned to manage its currency without a dollar peg. And in the US, Trump’s election has already accelerated global stock markets, and now points to pro-growth tax cuts with powerful second and third order effects.