We have had the destabilising impact of the Brexit vote, the disruptive Donald Trump being elected US president, and virtually unanimous agreement in the dismal science that the UK economy will slow sharply next year.
And yet the UK stock market, with only one day’s trading left today, is at a record high. Meanwhile, Wall Street is up between about 10 and 14 per cent depending on which index you use.
Counter-intuitive or downright strange? You could infer that arguably irrational exuberance is in the air again. The bulls will say that, as 70 to 80 per cent of the earnings of sizeable British companies come from overseas, they can be phlegmatic about the clouds looming for the UK economy.
But if the new president lives up to his words of bringing in punitive trade barriers with the likes of China, and possibly even quitting the North America Free Trade Agreement, that comfort of foreign earnings could evaporate overnight. All bets would be off.
An undoubted boost to late-2016 stock market sentiment is obviously the partly recovering oil price, now trading at a not completely industry project-abandoning $57 a barrel. That is some way from the washed-out $27 price in January this year.
Markets usually see a rising energy price as a tide that lifts most industry boats. However, if a much-expected slowdown in Chinese growth occurs next year that would bring wider commodity prices under pressure, and mining is a vital component of the FTSE 100 these days.
Shocks are possible. For every positive factor one can see helping shares, there is a negative prospect to suggest this is whistling in the dark as we crest the ridge into 2017.
The year we have been through has shot conventional wisdom full of holes. Presidential votes and the UK’s EU referendum in June – when leading London stocks were nearly 800 points lower than they are currently – have been used as protest votes against cloth-eared elites.
Economic well-being is not the whole of life, but just part of it has been the strident message. And then adding surprise upon surprise, financial markets have decided there may be opportunities amid all this disarray.
They say markets like geo-political calm. Looks like that ain’t always so.