Since the beginning of the year we took the view that, despite blustering rhetoric, the US-China trade dispute would be resolved within weeks of its initial deadline. Our optimism was grossly misplaced.

There are two certainties in economics. The first is that economic cycles exist: recessions eventually happen. The second is that economists are terrible at forecasting them. A recent study found that the IMF was able to forecast 5 out of nearly 470 past economic downturns.

In early December we argued that despite the increase in earnings, and the move in equity prices, the attractiveness of the equity market was somewhat ambiguous. While the earnings yield of equities increased through most of 2018, so did the return on cash, leaving the difference between the two virtually unchanged.