SG central scenario assumption: No double dip in the pipeline, outflows continuing from money market funds benefiting all asset classes. FX at the centre of successful multi asset strategies.
Key Call 1: Dynamic Allocation - Anything but Cash (0% return) as global growth reaches 4%. Continue to prefer Commodities and Equities over Government Bonds.
Key Call 2: Commodities - Our preferred asset class, backed by sustained global growth, rising inflation fears and significant inflows. Switch from Base Metals into
Oil. Buy Gold (inflation hedge).
Key Call 3: Currency markets - The Euro is now burdened by a widening Atlantic gap and governance problems. The Fed will start raising rates before the ECB. Go long the USD funded by the Euro.
Key call 4: Equities - Gear your fund to the best leverage on a falling Yen. Buy an
outright call on the ultra-cheap Nikkei.
Key call 5: Go US - Employment creation & end of USD crisis should support cheap equities. Buy the Nasdaq, backed by rising prospects of IT spending.
Key call 6: Bonds – Burdened by growing sovereign risk and prospect of Fed tightening. Caution on Bonds and bond proxies like Global Consumer Staples (relative to the market).
Key call 7: Emerging markets - Policy tightening to fight inflation. Emerging equities expensive. Buy a basket of Emerging FX and go short BRIC Equities/long Developed Equities
Let' s see how it runs going forward, and not less interesting would be to see the performance since 2007?