Since November, developed equity markets including the US have outperformed their emerging counterparts. In our view this is due to a shift in the perception of relative growth rates in 2011 - developed becoming less bad, emerging less good - rather than a changing of the longer term story. We have lowered our tactical weightings in emerging markets but still retain a strategic overweight.

David Fuller's view My own thoughts on this subject were posted in Fullermoney's lead item yesterday.

The chart on page 2 - Total [US] Credit Market Debt as a % of GDP - is a shocker, even for those who know the approximate numbers. Debt of $52.280 trillion is 3.544 times GDP of $14.750!

A question that investors may wish to ask themselves is: To what extent will the US Federal Reserve try to inflate away this debt?

The US government will obviously try to increase GDP and cut expenditure where possible. However this is not easy given the debt burden, weak economy and high unemployment. Therefore the government will try to inflate away as much of that debt, over time, as it can get away with.

That is why I expect to trade US long-dated government bond futures from the short side for many more years. I also maintain that US multinational companies leveraged to the global economy are good hedges against a further decline in purchasing power for US dollar which is likely to occur.