Last week spelt the end of the inflation story and this is a reason to be bullish. That is the view of UK-based Michael Browne, a fund manager at Martin Currie.
"This could be rather tricky for those who are bulls of this and who seem to be crowded into three trades," Browne told CNBC Tuesday.
That crowd includes those long commodities, short the dollar versus the euro and yen and those shorting bonds.
"If the dollar is to rise, there is no need for interest rates to rise in USA, or at least less so," said Browne. "If commodities were to fall, then there is no need for rates to rise in Europe. Less pressure on the periphery."
If bond yields fall, it means the consumer benefits on both sides on the Atlantic, said Browne.
"Equities we will grind higher over the summer. Corporate earnings are robust, valuations are cheap," he said.
Amid fears over a Greek restructuring, Browne said that unless Spain gets into trouble the problem will not derail the economy.
"The PIGS (Portugal, Ireland, Greece and Spain as the troubled euro countries were dubbed by investors) are too small to cause any real damage," he said. "Europe was always going to end up writing a check for Greece, it's just a case of how it's done. The cost for Greece will be a major asset sale, big European controls and lower wages."
Germany, in Browne's view, will grow over three percent this year, in no small part due to exports to the rest of the euro zone.
"If last week wasn't the end of the inflation story, and inflation acts as a tax on consumers, then it will come soon," said Browne. "Watch out for firms that the market thinks have pricing power but don't...UK food retail would be a classic."
"Remember to be a bull is the least comfortable place to be, least consensus position out there," he said. "So it must be right. We are 70 percent long and have been buying."
