THE BEST PERFORMER in the world over the past year: Irish government bonds, returning 19.0 per cent.
The icing on the cake? The best performer in the entire world over the last six months is… Irish equities, returning 15.3 per cent.
It’s a double feature. Bank of America Merrill Lynch’s global equity strategists led by Michael Hartnett attribute this to the effects of “The 3R’s: Restructuring, Recapitalisation, and Regime change”.
In a note to clients, they write:
The Irish Restructured debt, Recapitalised banks and voted for Regime change (austerity). Indebted countries that fail to implement fiscal contraction will see markets do job for them. Only way to get ahead of severe debt dynamics is “Big Bang”.
Without common sense fiscal policy that allows periphery to refinance debt at reasonable terms, European equities should not be owned, in our opinion.
Markets simply want: global policy coordination; a clear exit plan for Greece; firepower to support peripheral bonds in exchange for credible austerity.
We know what they want; we’ll see what they get here pretty soon.
- Matthew Boesler