The new, new supercycle

Super-Cycle Leaves No Economy Behind Before Davos Summit

By Simon Kennedy - Jan 23, 2011 9:01 PM GMT-0200

For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher...
Lyons and his colleagues predict a “super-cycle” of historically high growth that will last at least a generation and will be led by booming trade, investment and urbanization, according to a report published in November. He reckons such a cycle has occurred only twice since the end of the 18th century: the four decades before World War I and the three following World War II. He’s betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s...

“World-trend economic growth is being lifted,” said London-based O’Neill, who helps manage $840 billion. “The notion that BRICs benefit at the expense of others is increasingly out of date.”
Investors should buy copper, coal and oil to take advantage of the growth of cities in emerging markets, according to Standard Chartered, which says the Chinese yuan, Indian rupee and Korean won will appreciate on strengthening domestic growth.
Developed nations also will benefit as their emerging- market counterparts invest more abroad, hire more of their workers and rely on their expertise in areas such as financial services, said Lyons, who will be at Davos. He predicts both the U.S. and European Union will enjoy an average trend growth of 2.5 percent through 2030, compared with the 1.9 percent and 1.7 percent he forecasts for this year.
“It’s a win-win situation,” said Lyons, who concedes growth won’t always be strong and continuous during the entire period....
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Comment: Markets climb a wall of worry and drown in a wave of optimism.