Climate sea change and profiting from the global economy

There has been a sea change in the climate for investing in equities since the beginning of the year. In January, credit spreads were pricing in a ‘Second Great Depression', banks were bust on mark-to-market accounting and companies had shut factories and moth-balled production.

The debate was whether there would be any economic recovery at all. We now know this was the bottom. Leading economic indicators hit a low in December last year and are recovering towards levels that suggest economic expansion. Credit investors have had their best ever year, with most indices recovering to above pre-Lehman bankruptcy levels. France and Germany were the first countries in the G7 to emerge from recession. Other European countries are about to join them. There will be economic growth  for the rest of the year with things moving from being ‘less bad’ to ‘good’. This will ...