2015 Outlook - Tough Choices Ahead

While the year-end equity rally continues apace, it is time to look ahead into next year and assess the challenges and opportunities 2015 will bring. We will begin with the macro backdrop, discuss the policy implications extending from that backdrop and address the tough choices policymakers face as a result. We will then consider the financial market implications, contemplate the tail risks investors face and conclude with some favored investment options for the year ahead. Bottom line: 2014 returns make 2015 a tough call.

To assess the future, it helps to understand the past. We have spent the past six years or so battling the fallout from the Great Financial Crisis (GFC). This fallout includes broken growth models around the globe, both developed and emerging, leaving the world to await the next great growth model. In the interim, monetary policy has been the preferred weapon of choice to buffer the fallout, with fiscal policy sidelined due to political gridlock.