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Garnry: Three reasons why equities will beat bonds
Whilst most analysts suggest you should be overweight bonds, mainly because we the economy has outperformed expectations, Saxo Bank's Peter Garnry, disagrees.
He thinks we are going to see the opposite, and that equities will be the ones to outperform bonds.
Firstly, he expects central banks to keep interest rates low, and he thinks the global economy will pick up speed in 2014-15.
Secondly, from a historical perspective, Peter says equities should outperform bonds by at least 4% annually. This means that if you look at their performances since 1995, equities are still far behind bonds - so if history is any guidance, equities should be able to outperform bonds by 2-3 years.
And finally, he says that equity risk premium (which is when uncertainty is high, risk premiums are high, but valuation is low) is changing course; concerns about the economy are coming down, which means equity risk premiums are dropping too, which makes valuations higher.
01:42 minutes
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