Barclays Report Advises Investors to Loosen Purse Strings

Barclays Capital, in its quarterly research report, says the foundations of a bottom in the global business cycle appear to be in place, and suggests a turn for the better in economic news over the next three to six months. Given that, the report urges investors to become more aggressive.Barclays Capital’s Economic and Financial Market Outlook concludes that recovery is underway in emerging Asia, signaling the start of a six to nine month period during which most economies around the world bottom out and begin recovery. After this region, the U.S. should be watched as the next region for a recovery. With the downturn of the last six to nine months, U.S. manufacturing output is significantly below demand, which could lead to a quick reversal. The report also predicts over-weighting investment grade credit, with a focus on bank debt, which is trading at an all-time high premium over non-financial debt. It also recommends some exposure to equities in pro-cyclical sectors, such as industrials, energy and materials. Also, the report recommends exposure to cyclical currencies, such as the Australian dollar, as it sees the rallies of the U.S. dollar and the Yen ending.