While the global valuation of all stocks is approaching $90 trillion, in one year alone, the value increased by $17 trillion – 2019 was a fantastic year. However, when we look closely at the increase in stock markets, we see that it has been Central Banks that have driven the values higher, with cheap money. The main leaders were the US tech names that have global reach and have invested heavily in AI and other future technologies. The banner year for equities has been supported by both easy monetary policy and political developments around the world. More recently, the first step in a trade solution in the form of Phase One, a deal that is being hammered out by the US and China.
Make no mistake, the trade deal is the first step, there are many more steps or mini-deals that will take place in the future. Also, the US updated NAFTA deal and the shockingly lopsided win by Boris Johnson – sending the Left into a tailspin in the UK – is also a step in the right direction. These are all solutions to problems that are giving equity markets a boost. Apple stock rallied 80% and Facebook rallied 57% in 2019.