Concerns about the end of QE2 have put downward pressure on equities and bond yields. We think this will ease. We expect the consensus outlook to improve as it did in the face of Y2K. Like the June 30 end of QE2, Y2K crash warnings had a date certain, January 1, 2000, to worry about, causing months of hand-wringing due to the uncertainty. Equities ended up rallying over 15% in the final three months of 1999 and went higher in following months. We expect a substantial flow from bonds to equities in coming months as the growth outlook improves, inflation rises...
