Commentary: Macros lining up for a positive 2014

03 January 2014 09:31  [Source: ICB]

The global economy is not going gangbusters, but things are moving in the right direction. The mood is more sanguine in the US, especially in the chemical sector, which is riding the shale gas wave. Both large and smaller chemical companies are generally optimistic for 2014 prospects.

Broadly, the US economy is picking up steam with industrial activity on the upswing and the labour markets improving. In Europe, economies are swinging from recession to growth – but very slow growth, and this remains a concern.

China continues to post positive manufacturing purchasing managers’ index (PMI) numbers, indicating expansion, although growth has been much less robust than in years past.

However, of course, there are the usual pitfalls. Once again the US is approaching a debt ceiling some time in the first half of 2014, and a political resolution is far from certain. And investors are dreading the eventual tapering of quantitative easing (QE) from the US Federal Reserve. Even as the Fed has telegraphed its intent, the energy, commodity, equity and debt markets are unlikely to simply take this in stride.

So even as macro factors are lining up for a strong 2014, watch for the pitfalls. Happy New Year!

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