This time last year we worried about stockmarkets. Most had been going up for too long and were too expensive. We figured the great bond bull market must be near an end. And we felt the inflation that we had long been sure quantitative easing (QE) would deliver was beginning to appear in the real world (it's been apparent in asset markets for years). We also worried about politics: the QE-driven rise in wealth inequality was having consequences most obviously Corbynism and Trumpism. We expected to see growing state interference in the economy as governments tried to shift profits from managers and shareholders to workers. We were especially concerned that the monopolistic US tech stocks would end up at the centre of that storm.
We were, as usual, a bit early. Last year offered a fair amount of political turmoil but outside the imaginations of newspaper columnists not that much drama. We have the same prime minister as in January last year. Brexit is turning out, as we suspected, to be more of a tricky administrative unwind than a social or economic disaster. Donald Trump has not (yet) started a war. Bonds wobbled mid-year, but recovered. The FTSE 100 gained 7.6% over the year. The only asset class that really started to move as the fundamentals suggested it should was prime London property down 4%, according to Savills.
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