The big idea for 2014 is: The final return to a normal non-crisis economic environment. Search for growth is the next step.
Every year in December, all of the big investment banks come out with detailed forecasts and predictions for what will happen in 2014. Some of these calls can be very focused, while others are very macro. The predictions frequently come as long notes, providing detailed analysis.
2014 big idea was stated most conveniently by the Japanese investment bank Nomura, which titled its next year outlook the “End Of The End Of The World.” Since 2009, investors have been able to make progress merely by beating back the doomers, the bank says. Betting against a U.S. financial collapse and against a Chinese hard landing that threatened the whole world was a successful strategy. Betting against a debt ceiling default was also the right call.
In 2013, all of these fears really did come to an end. Nobody is worried anymore about a big Chinese hard landing or a European collapse. And 2014 might be the first year in a while without some huge fiscal scare.
In 2014, instead of simply betting against the doom investors will have to find real growth.
Morgan Stanley’s outlook for 2014 incorporate similar ideas. The investment bank’s analysts lay out 5 big things that need to happen for sustained global growth. However, each pillar is region specific and not crisis related. For example, China needs to implement reforms and a growth model not just based on exports and credit. The U.S. Federal Reserve needs transition out of QE to a model more based on guiding interest rates.
But overall, the 2014 big idea is the same. Investors ought to look at region-specific stories, and not think about the risk of collapse.
Some economists even suggest that 2014 is a potentially “revolutionary” year for the global economy, precisely because of the end of the age of crisis.
More forecasts will be coming out, and surely market analysts and economists will have a different view of 2014. Still, the 2014 big idea is: The end-of-the-crisis is coming to an end.
