Guy Monson is a fund manager at Sarasin who has called the two-year rally in stocks and stayed true to his bullish views despite the wall of worry.
"Many of our clients have called after my last monthly report, asking me to 'remind' them once again how a nuclear crisis, a tragic earthquake and tsunami in Japan, regime change in North Africa, a war and $120 oilcan really be good for markets. Yes we understand that equities like to climb a 'wall of fear' but surely...," Monson said.
The fears articulated by Monson's clients sum up perfectly the conundrum facing all investors as stocks keep rising in the face of so many reasons to be bearish, but Monson told CNBC that this bull market has legs.
A rebound in US jobs data, strong growth from the BRICs (Brazil, Russia, India and China) will in Monson's view underpin global growth in 2011 and 2012. He is particularly bullish on corporate profits.
"Global earnings just seem to keep ticking up with the MSCI world (index of 1500 global stocks) having seen nine consecutive months of upgrades. Earnings are expected to grow by around 13-15 percen in Europe and the US in 2011," said Monson.
He pointed to strong dividends from companies like Vodafone and Novartis as a sign of corporate strength and said the recent boom in M&A is another reason to be cheerful.
"It is interesting to note the brand names involved but also the degree of inter-European purchases and the relative lack of Emerging Market buyers, reflecting perhaps the record levels of Western corporate cash flow," Monson said.
Growth Can Bring Problems
Commodity prices have been a big beneficiary of this bullish vision of the global economy in recent years and Monson sees reasons for this to be a positive.
"The world is being hit by this secondary oil shock at a time when there is still substantial spare capacity in Western economies and unemployment remains above trend, which has broadly allowed central bankers to 'look through' the risks to core inflation in many global markets," he added.
Despite the risk of inflation there has been no pressure on US bond yields as investors look for a safe haven from all the risks facing the world.
The market is now dismissing the euro zone crisis, said Monson, pointing out that Spanish yields has actually fallen while Portugalhas grabbed all the headlines.
"So while another series of 'Black Swans' in the Middle East, North Africa and Tokyo weighed on markets in the first quarter, the wider US market, all industry sub-sectors and most of Europe reported positive returns for the Quarter overall," he added.
Central bankers are now looking for reasons not to put the brakes on the economy despite an expected rate rise from the European Central Bankthis week, according to Monson.
"Across Western markets the possibility of further multiple expansion, more dividend increases/buy-backs and rising M&A suggests global equity markets can climb considerably further during the remainder of 2011," he added.
