Although global investors appear worried about America’s so-called 'fiscal cliff', Wall Street is proceeding on the basis that common sense will ultimately prevail and that Washington will manage to strike an 11th hour compromise.
Indeed, the US S&P 500 index has bounced back 5% in recent weeks, largely recovering half the decline in market since mid-September. At this stage, the US market remains in a firm uptrend, and the latest market pull-back appears just another healthy correction.
Wall Street’s resilience is good news for global risk markets as it is one of the best leading economic indicators around. It suggests the US economy is unlikely to stumble into another recession anytime soon.