With all the ups and downs of 2012, there are certain events that stand out for Paul Taylor, chief investment officer, fundamental equities, BMO Asset Management Inc. in Toronto, as having the biggest impact on global markets.
During a BMO year-end panel discussion on Thursday, Taylor listed these five key events for the global economy in 2012:
1. Draghi speaks
European Central Bank President Mario Draghi’s comments in July that the ECB would do whatever it takes to keep the Eurozone together, said Taylor, was a real turning point for the struggling continental economy.
“[It was] a seminal moment not just in 2012,” he said, “but presumably in this great experiment called the European common currency.”
2. Obama wins
U.S. President Barack Obama’s decisive win in November was a significant event for the year, said Taylor, because it signaled an ongoing shift in power on Capital Hill towards Democrats. This power shift is becoming more obvious, he said, as talks continue about the fiscal cliff crisis.
3. A rush towards bonds
In 2012 there was an “avalanche” of funds flowing into bonds, said Taylor, which could have serious consequences for bond markets over the next few years.
4. The “holy trinity” of economic data
This past year saw an emergence in three positive turning points in U.S. economic data, what Taylor refers to as the “holy trinity.”
This three turning points are: the recovery of the U.S. housing market; an emerging demand for U.S. automobiles – as many as eight million units of autos could be added to the normal level of demand over the next two to four years – and the U.S. becoming a self-sufficient energy nation.
5. China’s economic rebound
Since its soft-landing in the third quarter of 2012, China’s economy has stabilized, which may be a signal of a re-acceleration of Chinese growth in 2013, said Taylor.