This month we examine the arguments suggesting that much of the equity market rally from last autumn is speculative and hence fragile. We point to some more fundamental improvements in the global background, in particular the slight upturn in the global economy. In addition, the current valuation of global equity markets, while stretched, is not speculative. In addition, a wider range of companies have participated in the rally than was the case last year. At least for now, risks to equities are more from political developments than broader financial conditions.

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