Sorry, gloomsters – bull market will run for another year

trudge higher. A weak pound skewed global stocks’ returns in sterling. But don’t be fooled – 2022’s lows started a new, young global bull market that turned one this last October. Expect a second birthday.

Why? Start by looking at growing economic resilience. Despite ubiquitous recession calls, 2023’s global GDP grew. America’s accelerated all year – soaring 4.9pc, annualised, in the third quarter of 2023. Most mistakenly dub it a global “soft landing.” It can’t be a “landing” if there was no descent.

Yes, Britain’s third- quarter contraction, followed by October weakness, ruffles feathers, as do other scattered weak spots like Germany. But markets have surely pre-priced regional blips after more than a year of chatter about hard landings.

The FTSE and Germany’s DAX both hovering near all-time highs is evidence of that. But it isn’t all good news. Headwinds linger and stealth UK tax rises stink. But all that has been known for years. Anyone wishing to sell stocks on the babble surely already has.

Inflation? It has cooled big-time, and globally. UK headline CPI more than halved since late- 2022’s near- doubledigit heights. Even sticky core inflation is down – and should keep falling for

When presidents’ second years were negative – like 2022 – their subsequent fourth year was positive every single time since the Depression’s 1932 bottom, averaging 15.7pc returns. UK stocks in those fourth years were almost as positive.

Why this phenomena? US election year positivity spills globally, including in Britain, since developed markets have long been far more correlated than most assume, as I explained in June. Hence, the FTSE All- Share rose in 70.8pc of US election years since 1925, averaging 10.4pc total returns.

Yes, short-term volatility can strike briefly for any or no reason. And jibber-jabber when Britain goes to the polls could spark worrying wiggles in markets. Ignore it. Maybe today’s poll numbers hold up and Labour trounces the Tories, and maybe not. It is too early for those real probabilities.

Whatever happens, uncertainty will subside as 2024 progresses. The Tories are currently too divided and scared of election consequences to pass much beyond tiny tax cuts. Legislative stagnation is stock market fuel – when politicians are scared to lose, stocks cruise.

Big growth stocks should keep leading early this year, particularly after their initial January swoon. Britain, though, has few listed tech companies worth mentioning.

As the resilience of global GDP becomes more apparent, short-term interest rates eventually will start falling, flattening and then steepening. The currently inverted global yield curve (where longer-dated bonds have lower yields), will revert to norm and so- called “value” stocks should take the lead. Why? Because rising interest rates make bank lending more profitable, loosening lenders’ purse strings.

That favours value companies, whose weaker financial strength and economic sensitivity make them more loan-dependent for growth financing. The FTSE’s financials, staples, energy, materials and industrials sectors, two thirds of its market capitalisation, should shine in 2024’s back half.

Crucially, and contrary to popular belief, rate cuts aren’t needed for this bull market’s survival, as stocks’ ascent in parallel with lots of rate rises since 2022 proves. Well-known, pre-priced worries won’t kill this young bull market. That takes a big, unknown shock. I see none lurking now. Stay bullish, but nimble, in 2024.

Ken Fisher is the founder of Fisher Investments