“As we move into 2017, our view remains that much like this year; politics will create plenty of lurid headlines, but it will be the underlying fundamentals of the economy that matter most for investments. The influence of the political backdrop on those fundamentals will likely remain hotly debated, but marginal in most cases.

“We remain wary of this anti-globalisation/end-of-liberal consensus theme that is attracting so much conversation at the moment. But we remain focused on positive prospects with our most valued indicators – ISM surveys, yield curve, EU interbank rates and CDS, narrow money growth and private sector balance – pointing to global economic growth remaining above stall speed and inflation bouncing back.

“All in all, the world looks like it will continue to reward portfolios slanted towards equities at the expense of bonds. There will come a time to change that stance, but at the moment that does not look imminent to us yet.”

The five key takeaways

• Five preferred indicators continue to point to the economic cycle having further to run – stocks to continue to outperform bonds
• Politics to continue to offer more bark than bite for capital markets investors – European equities to outperform, but nervous European equity investors should retain unhedged exposure to US companies
• Emerging Markets Equities to outperform in spite of protectionist noises emanating from the developed world
• For equity sector strategy, focus on areas most likely to benefit from underestimated prospects for growth and inflation – banks, industrials and technology
• A diversified portfolio will still be your best defence against unforeseen equity downdrafts