Trevor Greetham´s Investment Clock March 2012: How long will the upturn last?

The Investment Clock is moving towards the equity-friendly Recovery phase and our multi asset model has turned positive on risk assets for the first time since July 2011. Political risks remain high in the euro area but the crisis could go into remission with a US-led recovery in global growth under way.
A correction in stocks is to be expected after a strong rally, but we would see dips in the market as buying opportunities. A premature curtailment of central bank liquidity could lead to another downswing in global growth and stock prices, but we are hopeful that central banks have learnt their lesson and will keep monetary policy loose.

LEAD INDICATORS IN FOCUS
Inflation
The inflation scorecard remains in negative territory.
Leading indicators of inflation continue to point downwards.

Growth
The global growth scorecard turned positive in February for the first time since June 2011.
A US-led recovery in global growth is underway and central banks are maintaining supportive monetary conditions.

CURRENT ASSET ALLOCATION POSITIONING

• We moved overweight in risk assets (equities and commodities) in our multi-asset funds for the first time since July 2011.
• We moved underweight bonds for the first time since the summer.

Within equities, we continue to favour US equities. The US and euro area economies are seeing their most pronounced economic divergence since the German reunification boom in the early 1990s, this time in America’s favour.

Trevor Greetham joined Fidelity in January 2006 as Asset Allocation Director.  In addition to managing funds, Trevor is a member of Fidelity’s Asset Allocation Group.
Prior to joining Fidelity, he spent ten years at Merrill Lynch, where he was Director of Asset Allocation. Trevor began his career with UK life insurer Provident Mutual. He holds an MA in Mathematics from Cambridge University and is a qualified actuary. 

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