‘Infinity bonds' key to maximising returns in a stampeding market

How do the runes read? As a result of cutting costs and maintaining prices, companies are continuing to show better cashflow.

Perhaps the main negative of the recent reporting season has been the ballooning of pension deficits in some companies. On the other hand, having cut expenditure in response to the credit crisis, companies are probably generating more cash than even they anticipated. At some stage they will resume their business investment and/or begin to raise or resume dividends. As year-on-year revenue progression is improving, we think this will continue to give better-than-expected earnings. Combined with good cash generation, this is probably enough to sustain or further the rally. But once this...