The recent short-term rally in global stock markets has boosted optimism towards equity investments.
While always glad to see our clients benefiting from market increases, CLS portfolio managers continue to keep a vigilant eye on market risk. In addition to our Risk Budgeting Methodology, we also regularly identify specific risks of greatest concern. (You can follow our list of key concerns by reading our quarterly CLS Reference Guide or Monthly Perspectives.)
Currently, global debt levels trouble CLS more than any other specific risk. While the risks of the 2008 global financial crisis are in the past, the debt used to help spur the economy past the crisis remains. This post seeks to explore different ways global debt levels might slow stock market returns in 2017. Before exploring the details, keep in mind the previous sentence included the word “might.” While these risks will shape markets in 2017, the most likely outcome is global governments will muddle through and markets will rise.