Be Long, Be Careful
December 13, 2013
2013 is going to end up being a very good year for investors in the so-called risky assets: the S&P500 is up almost 30% as I write this, the EuroStoxx 600 is up more than 13%, the Nikkei +50% and the high yield segment of credit is returning double-digit performance, too. Overall, we confirm our long equity/short fixed income strategy, but with a note of caution, due to, overstretched valuation for major equity markets. We retain our underweight in US equities. In addition, we believe that the low inflation scenario is becoming a structural feature of the economic picture, especially in Europe, which is battling with deflation.