Market analysis
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The investment clock spent its second month in the stagflation quadrant in December as weak developed economies suppressed global growth readings while booming emerging economies stoked commodity-driven inflation. Evidence is mounting that the world economy has passed the trough of a new mini-cycle and global growth will strengthen over 2011. The inventory imbalance in developed economies apparent early in 2010 is unlikely to be a significant drag on global growth given the recent strength in US retail sales and improvements in CEO optimism. The most likely scenarios for 2011 are decoupling between developed and developing economies as happened in 2007-08 or a strong, synchronised global recovery.
