MULTI-MANAGEMENT: World is finding a new balance

Having now retraced close to 40 per cent of the bear market that began last June, we expect equities to enter a consolidation/corrective phase, allowing time for the fundamentals to catch up. The short-term risk, however, is that they don't, making this phase more corrective than the market now expects. Underpinning the rapid move higher over recent weeks has been a round of "less bad" contractionary numbers in the West, and some better than expected expansionary numbers in the East (mainly China). While promising, it remains unclear in our view whether this signals merely an inevitable improvement from the post-Lehmans' freefall or a more sustainable turn in the business cycle.