Generally, I see the outlook improving as the year progresses due to stabilising or falling interest rates. If interest rates are kept higher for longer this will prolong recovery. UK manufacturing has now effectively been in a recession for 9 months so in my view the Bank of England is behind.

In China you will have seen the Covid protests. Although these were cracked down on, the result was the complete reversal of China’s Covid strategy, and they have now stopped lockdowns. Although sensible this could be viewed as a sign of weakness on Xi’s part which may incentivise protests on other issues. Whilst in the long term this could be a good thing for the West, if a more friendly governance were to follow, it could mean volatility for financial markets. I imagine there is a low risk of this scenario, but it is one to look out for.


Paul Coffin
January 2023

For related comment see Stock Market Review, Volatility is also an OpportunityInflation, Cost Push, Strikes, Wars et al


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