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B. G., Opalesque Geneva:

Magellan Asset Management, an Australia-listed fund manager focused on global equities and infrastructure, feels pretty optimistic about inflation in the G20 countries, expecting it to return to about 2%, primarily thanks to Central Banks.

Currently, the inflation rate among G20 countries hovers between 1 and 8%, apart from Argentina (272%), Turkey (71%) and China (0.2%).

"As this unfolds, we see a soft landing, with growth remaining below trend until spare capacity rises to more normal levels. In this scenario, equity markets should grind higher," writes Arvid Streimann, head of global equities, in Magellan's latest macro insight.

However, this base case may not play out. The most likely reason would be a negative demand shock (a decrease in demand for products or services). It would reduce inflationary pressures and be positive for markets if minor as interest rates would decline, but negative for markets if major. The next most likely reason would be a negative supply shock (a decrease in output, causing prices to increase), which would push up inflation, and be negative for markets as interest rates would rise. "International confrontation remains the most likely trigger… Accordingly, we expect the decoupling trend to strengthen further," says the manager.

A positive demand shock (an increase in demand) would also boos......................

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