CFA Institute annual survey of economic conditions was published yesterday and here are some core snapshots (full study available here):
Expectations change in favor of economic expansion:
Euro area crisis continuation is the largest source of overall risk to global capital markets, at 37%, followed by concerns over economic conditions. CFA Members were divided on their expectations concerning the euro area crisis, with 23% expecting crisis easing, 35% expecting worsening and 42% expecting crisis conditions to remain at the levels of 2012. In other words, 77% expect no improvement in the euro area. An interesting snapshot into both path dependency of forecasts and anchoring of expectations is that most optimistic responses came from worst hit countries: Spain (53% expecting improvement) and Italy (46%), as well as from two countries least impacted: France (43%) and Germany (43%). Least optimistic countries are all outside the euro area: Russia (45%), UAE (41%), the US and Singapore (both at 39%) and S. Africa (38%).
Optimism about local economy expansion went up, slightly, from 42% in 2012 to 45% in 2013.
And on Asset Class performance, equity seems to be king, as I predicted some time ago on foot of the long term decline in debt and liquidity over-supply globally:
No major surprises then: the balance is between continued and ameliorating crisis, plus liquidity surplus sloshing into equities. The former is yet to play out, the latter has already begun.
