Preference for equities could reverse in short term

ON ASSET ALLOCATION

Baring's Andrew Cole says there is the chance of a counter-trend reversal in both equities and bonds.

The beginning of 2011 has seen strong data emerge from Western economies. With growth in Northern Europe, the US and Japan seemingly back on track, consensus estimates have been raised across the board, particularly in the US. Yet, while we are seeing signs of strong growth, it is important to recognise we are seeing signs of inflation, and not just in the UK and China. Elsewhere, political risk remains in Europe as the sovereign debt crisis stubbornly rumbles on. The latest country to come under the spotlight is Belgium, where political paralysis has dogged the country since last June’s...