The big picture for 2014 and beyond

Investment markets performed exceptionally well through 2013 with the USA and many European share markets pushing through record highs.

In most of the major developed economies, the threat of a fall back into recession has passed. Output, spending and employment are rising. Inflation and short term interest rates remain near record lows but longer term interest rates in many countries are edging higher on the back of improving global conditions.

Prices are also at record levels for many quality Australian companies. The overall market, however, remains below peaks seen in 2007. Refer to Figure 1. Divergences between the world's different regions and countries seems likely to persist, but with some new twists and turns.