LONDON (Reuters) - With global stocks heading for their best month in a decade, the dollar having its worst fall since 1985 and government debt embarked on a massive rally, it is worth asking whether a new world for investors has dawned.
If it has, a lot of major investors have been left wrong-footed.
The immediate trigger for the wave of sharp asset moves that has gripped markets was Wednesday's move by the U.S. Federal Reserve to buy long-term Treasuries.
Followed up to a lesser extent by the Bank of England's announcement on Thursday that it would start buying corporate bonds, it left a strong message that monetary policy officials are prepared to do what it takes to reverse economic decline.
"Let the printing press roll!" was how Goldman Sachs interpreted the Fed's move.
It has come against a background of, let's say, less-gloomy-than-expected corporate news. General Electric (G.N) said on Thursday, for example, that its finance arm GE Capital should be profitable in the first quarter.
That followed similar profitability reports from Citi (C.N), Bank of America (BAC.N) and JPMorgan Chase (JPM.N) last week.
Such a environment, combined with a belief that equities are cheap after their huge falls, has turned some investors bullish.
Fidelity's former star fund manager Anthony Bolton told a fund management conference in Luxembourg this week that it is a a good moment to pick up battered stocks.
"Today is the time, if you're going to own banks," Bolton said, adding that equity markets were pretty attractive and there were signs of recovering economic growth.
It is certainly true that some of the features of the old bull market have suddenly resurfaced -- plentiful liquidity, a declining dollar and a rising oil price, to name three.
And there is no arguing that a rally of sorts is under way. MSCI's all-country world stock index is up more than 8 percent this month, its largest monthly gain since October 1999.
It has gained nearly 18 percent over the past eight sessions.
That said, most investors remain super-cautious -- to the point that if a new bull market has actually started, they have missed it. At Luxembourg's annual fund management gathering -- and the Reuters Funds Summit that ran alongside it this week -- there was little to suggest that the pain of the past year and a half, particularly on equity markets, was about to be replaced by pleasure.
The consensus appeared to be that there were small signs of confidence growing but nothing anyone should get too excited about.
It was neatly summed up by Kathleen Hughes, head of global liquidity EMEA, at JPMorgan Asset Management.
"Risk appetite returns in stages," she said. "It leaves on a horse but comes back on foot."
The baby steps of recovery that Hughes could see were falling demand for short-dated U.S. Treasuries and other government-guaranteed paper, the safest of the safe.
This trend has been noted by fund tracker EPFR Global, which said separately that money market funds, the bellwether for investor risk aversion, had net outflows of $381 billion in the second week of March.
Also typical was the caution expressed by LGT Capital Management, the Liechtenstein-based wealth manager.
"I do believe that at the moment the best place to be is conservative government bonds," Torsten de Santos, LGT's chief executive officer, told the Reuters summit.
"As soon as the deflationary risk decreases, it is worth building up positions in investment grade (corporate bonds). But we think it is too early so we have waited."
STEP BY STEP
It is notoriously difficult, of course, for investors to catch a shift in market direction, so there is nothing in the caution expressed in Luxembourg to rule out a new investment climate ahead.
Michael Dicks, head of investment strategy at Barclays Wealth, thought he had detected what he called a "glimmer of hope" about a month ago.
He now reckons he was a bit early, but says some of the worries, including whether central banks could do more than cut interest rates, have eased.
As a result he is expecting investors to start moving up the risk curve.
He warns, "It won't be a straight line in markets. But there a good chance that set backs won't be to recent lows."
(Additional reporting by Lisa Jucca; Editing by Ruth Pitchford)