Aggressive tactics to stem the tide of panic sweeping Europe, growing signs of a recovery in the US and a solid core to Chinese growth are all creating a positive picture for markets in the new year, Becket (pictured) believes. "All three of the big macroeconomic issues that have concentrated our minds during 2012 could be partially easing as we approach the end of the year," he said.
"Our expectation is that next year should be better for the economy, even if we do not expect a rapid pace of economic growth."
Becket thinks the debt burden that haunts western economies will prevent a rampant bull market, but he thinks investors have become overly pessimistic about the future and are ignoring vital signs of health from various quarters.
"The oft-discussed issues over deileveraging and indebtedness of the developed world will continue to impair growth and keep trend rates of expansion below those that were enjoyed in the previous two decades," he continued.
He also thinks the situation in Europe has greatly improved.
"While Europe remains the iceberg capable of sinking the global economy, we do believe that the aggressive promises from the European Central Bank have given Europe a stay of execution."
"Europe remains a nagging thorn in the side of the global economy but it is no longer the infected wound that it was for most of this year."
Meanwhile, growing signs of strength from the US are being ignored while the world concentrates on who will win the election.
"The US political scene has cast a shadow over economic evidence suggesting some elements of the US economy have improved."
"In particular, there is sufficient proof that a US housing market recovery is underway, providing a healthy dollop of confidence to both banks and consumers alike."
The implications of a win for Mitt Romney, in particular, have stoked uncertainty.
"News that governor Romney’s chances of election have increased have added to the uncertain feel to equity markets," Becket continued, "Given his stated views on China’s ‘currency manipulation’ and his desire to end Ben Bernanke’s tenure at the Federal Reserve."
"Although arguably some of Romney’s principles would be positive for equity markets in the longer term, this uncertainty just adds further fuel to the flames of fear."
"As soon as the election is out of the way the US politicians have the ‘fiscal cliff’ and spending cuts to address. Our view remains that after much public arguing and name-calling, the US politicians will do what they do best; fudge the issue and kick it down the road."
"Markets should be content with this outcome."
The final prop supporting Psigma's positivity is a strong outlook for China, which has been ignored by increasingly pessimistic investors.
"Many investors have been unnerved by the slowdown in the middle kingdom," he said, "And concerns over China’s own leadership transition."
"China’s slowdown has led to a weak year for many commodities and resources companies, as question marks over the trajectory of China’s growth roiled certain investments."
"That the summer just finished was a relatively soft period for the Chinese economy is an inescapable fact, although we have been amazed by the change from over-optimism about China to over-pessimism."
"It is now very fashionable to talk about how the Chinese economy is about to implode. Having just returned from a research visit to China, our views on the situation there have improved."
"We have never subscribed to some of the loftier hopes over China’s re-emergence as the world’s biggest economy, but we do recognise its importance for both the global economy and financial markets."
"Our view is that China’s overall growth rate has slowed, but that the quality of growth is better and more sustainable."
"In particular, the renewed focus on improving consumption within China is very welcome and should lead to a more stable economic backdrop in the years to come, even if in the short-term the Chinese growth rate is more volatile."
Performance of fund since manager took charge vs sector
Source: FE Analytics
According to FE Analytics, Becket has returned 29.53 per cent to investors since taking charge of the Psigma Dynamic Multi-Asset fund, compared with 23.04 per cent from its IMA Mixed Investment 40-85% Shares sector.