The twinkling lights on the streets and cold morning air tell us it’s almost time for Christmas. It is time to bid a year farewell and welcome another one. As for the markets this year, the global economy has returned to trend-like growth, following a very weak start. Less fiscal tightening both in Europe and the US have played a major role in this economic recovery. This year, there was no US fiscal crisis; no hard landing in China; and the European Union managed to keep both the Euro and Eurozone intact. As a result, equities soared, gold collapsed and the bond market bull was dragged back and tethered. If the S&P ends near 1800 and the 10 year US treasury yield ends at 3%, equities will have outperformed bonds by +40% in total return terms – the highest ever. The year 2014 will be a year for cautious optimism. I am optimistic about the US but cautious about Europe. US equities continue to be a good long trade and Japanese equities are also a buy. Emerging Market (EM) equities had a great Q4 as a tactical long, however, I am wary to be long EM equities beyond January when ‘tapering’ talk will likely gain momentum. USD will strengthen more against EM currencies than the developed currencies.