Markets over the past few months have not been easy even though the major Indices are at fairly high levels. The UK is showing faint signs of growth and Quantative Easing and the money pouring out of the Bank of England has reached a record £375 billion, which few might have predicted. Sir Mervyn King is reaching the end of his tenure as Governor and time will tell how his surprise-choice new successor, Mark Carney will get on.
There seems to be a school of thought that not paying the debt off may be what will happen and the debt will be written down, but that causes further inflationary pressures so the situation has to be finely balanced.

The Eurozone remains volatile. Germany is dominant and France is the junior partner in the Franco/German alliance. Angela Merkel had a far better partnership with the previous French president and the weaker relationship means that the Germans are very much in the ascendancy. The US has had a reasonable run, although the hurricane closed the New York Stock Exchange, which has not happened for years from a weather-related incident. Re-elected President Obama will have to deal with the much talked about “fiscal cliff” which is looming in January. This is a mixture of tax cuts and benefit reductions which were agreed under the Bush Administration and whilst it is agreed that taking money out of the economy at this stage in the cycle is not going to be beneficial, the Americans, as usual, will run it to the wire before taking action and after the more sensible options have been exhausted.

For investors, it is all about choosing the right stocks and as political leadership is not forthcoming, companies have to look to new markets and find a way of making money from hard-pressed consumers everywhere. Emerging markets have been more difficult to measure but with China still growing rapidly compared with the West, the middle classes continue to buy and demand more. Their Government is changing so watch where the new leaders travel first — an indicator of who is strongest.

Elissa Bayer is a senior investment director at Investec Wealth and Investment