>THE BIGGEST PICTURES (MERRILL LYNCH)

Bullish Global Equities

• History: rolling S&P returns worse since 1930s
• Cash: investors +20% in cash
• Positioning: asset allocators close to record low weightings in equities
• Risk: out of equities into government bonds
• Global recession: its over
• Liquidity: fragile recovery (+ CA default risk) means it stays abundant
• China: the lead indicator is in a secular bull market
• Risks: “visible fist” of government = lower consumption + worsening credit market
• Direction of US retail sales in H2 will determine direction of global equities
• MSCI World (MXWD) target is 300
• We love EM equities (but Japan, Eurozone, consumer discretionary, financials more contrarian)
• Fatigued technicals still say summer correction: buy it!

IN REPORT SEE CHARTS ON:

• Always buy “Humiliation”
• Equities are the distressed asset
• Cash levels still very, very high
• Equities still unpopular
• Risk now in Treasuries not equities
• Lower volatility…lower risk in banks
• Global recession is over
• Small recovery…big liquidity
• China roaring; deflation ebbing
• “Visible Fists” & “Buyer’s Strike”

To see full report: THE BIGGEST PICTURES