Barings' CIO on the mother of all rallies...and then the crash

Baring Asset Management's chief investment officer said equity markets are facing the "mother of all rallies" before inflation, brought on by QE, brings the markets crashing down in five years' time.

Marino Valensise (pictured) said markets have recently been supported by central banks which have taken the negative tail risk away from equities with types of various stimulus. However, as QE normally is followed by rampant inflation, the CIO warned investors to consider their assets when it returns to the markets in five to seven years. "We are going to have a rally in the next two to three years, but this enormous amount of liquidity will create inflation. Equities do better with some inflation in the system, but it is not going to be good for bonds. "If inflation goes through a...