It’s not just the US that may have a new leader, the world’s second largest economy, China, will most certainly have a new leader as the political cycle in the two economies coincides next week. While the market has been focused on Europe all of this year, what happens in the US and China post-elections, will dominate the agenda over the coming months. Policy gridlock in US and a policy vacuum in China will likely give way to new announcements and new actions in both countries. Despite the macro risks overhang this year, Equities have done well and the rally has come to be known “the most hated rally.” The reason for the rally is simple – liquidity trumps. The recent decline that we have seen in the S&P 500 came when the vast majority of economic data were all better than expected. Fiscal policy uncertainty is likely to keep things volatile but I have little doubt that the “fiscal cliff” will be averted regardless of who is in the White House come January 2013. The fears of a hard landing in China have proven unfounded, economic indicators suggest China’s economic plans are on track and the “stimulus” powder is still dry, if it needs using. Any EUR rally is likely to get capped at the 1.35 level. Gold is a long term buy; however trading 10% rallies and sell-offs could still bring returns from an asset which moves higher in spurts and could be range bound for months.