French banking giant Societe Generale has told clients how to play 2010, with an emphasis on investors avoiding sidelines and taking on risk for their portfolios.
Alain Bokobza, who heads up the strategy team in Paris, highlighted the following trading ideas for making money this year.
Be a commodity bull. “Rising inflation fears, growth in emerging countries and US job creation should trigger inflows.”
Stay in equities. “Double-digit earnings growth and a normalizing risk premium should support equities.”
Anything but cash. “Abnormally low expected return as fears of a double-dip scenario will delay rate hikes.”
Equities are better than credit. “We expect a rising M&A cycle that would support equity more than credit.”
The Yen carry trade. “We expect the yen to slide. A weaker yen would greatly help the Nikkei.”
No bond market crash” We are underweight bonds but attractive carry trade to support market.”
Dollar and S&P 500 correlation to be broken. “With commodities supported by rising inflation and the USD by the Fed, the link would break.”