Economic Times
Barclays Wealth sees stubborn inflation, cuts stocks
5 Jul, 2008, 0544 hrs IST
LONDON: (REUTERS) - Wealth managers at Barclays are stepping away from equities and telling their clients to prepare for central banks to have difficulty controlling inflation.
In a strategy note released on Saturday, the bank's wealth management arm, Barclays Wealth, said inflation will not peak until at best the end of this year.
"Oil prices and inflation are unlikely to fall back sharply, and there are potentially severe problems stemming from wage/price spirals in some of the major developing economies," wrote Michael Dicks, head of research and investment strategy.
"The outlook looks increasingly gloomy for 2009, and Barclays Wealth has reduced its overall equities overweight," he added.
The reduction was particularly focused on European stocks, including Britain. "Better US consumer spending news should allow US equities to regain some ground soon," Dicks wrote. (Dream on - Jesse)
Barclays Wealth remains short on fixed income, which tends to get hurt in inflationary times. The wealth management firm trimmed it global economic growth forecast to just under 3 percent next year from a previous estimate of just over 3 percent.
“Depart from me, you accursed. For I was hungry and you gave me no food, thirsty and you gave me no drink, a stranger and you did not welcome me, naked and you did not clothe me, sick and in prison and you did not comfort me.' They answer, 'Lord, when was it that we saw you hungry or thirsty or a stranger or naked or sick or in prison, and did not care for you?' He answered, 'Truly I tell you, as you did not do it to one of the least of these, you did not do it for me.’”
Matthew 25:40-46