First, the good news. On the face of it, 2004 will be the strongest year for the global economy in the 21st century, with 4% growth, according to the Organisation of Economic Co-operation and Development. The stock market has already been celebrating the prospect for corporate profits, with the best gains accruing to cyclical stocks and recovery situations.

The bad news is that almost everything that is happening is bad for fixed-interest bonds: take your choice of threatening factors among fiscal indiscipline, massive global imbalances, credit binges and disregard for medium-term inflationary risks. Enormous flows of liquidity are present, however, as trade imbalances are recycled, so in the short to medium run market movements could prove to be unpredictable and even perverse.