The problem with good news

At the start of the year, there is greater optimism that the worst-case scenarios feared in 2022 will not come to pass. Inflation is receding, though unevenly, which limits upward pressure on interest rates. The US dollar has pulled back, providing relief to many emerging markets and US multinationals. The energy crisis has subsided, particularly in Europe, as the war in Ukraine grinds seemingly into stalemate. And China’s abrupt U-turn on its Covid policies means a much better growth outlook for the world’s second largest economy.