Market Outlook 2002 - A 360° view from our Global Investment Committee

This note sets out our best view of major market returns in 2002. Forecasting financial asset prices accurately is inherently difficult, and we will adjust our views as new information arrives during the year. The conclusions represent our best collective opinion right now and, together with the underlying analysis, are presented to explain how we determine our top-down market views. They are PCAM's (Private Client Asset Management’s) official view having been reviewed by our Global Investment Committee.

- Steven Bell, Global Chief Economist, January 2002.

Key Points
- A copy of the Limited Partnership Agreement;

- 11 September marked a geopolitical watershed. Confidence has been hit and remains vulnerable but there are already signs that the economic impact will be brief.

- We expect the US economy to recover gradually in 2002. The rest of the world follows with a lag but global capacity utilisation will remain slack. Inflation tumbles.

- Economic momentum favours cyclical markets (emerging markets, Euroland, Japan). Equity valuations are not attractive in the US versus bonds but are generally cheap elsewhere especially versus cash.

- Japan’s structural problems continue and with zero interest rates the yen is likely to be the worst performing major currency this year. We expect the euro to recover against the dollar but sterling should lag.

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