As US GDP growth inches to the +3% level, China’s official manufacturing index hits a 7-month high and a Greek exit from the Euro is off the table (for now), the outlook for equities has gotten better and is likely to keep improving. We will see more investors gradually leaving the safety of bonds and gold and moving into equities. The risk of not being in equities and missing out, is greater than holding equities and having temporary reverses. The case for US equities is still positive with a preference for cyclical sectors, however I am more positive on Emerging Market (EM) and European equities due to a higher upside potential. I forecast the S&P to finish 2013 at 1554, i.e. a +10% upside from Friday’s close of 1416. Come Q1 2013, I forecast that Spain will ask for a bailout, that the ECB will activate the (Outright Monetary Transaction) OMT and will buy Spanish bonds aggressively and that Spanish 3 year bond yields will narrow from the current 3.4% to under 2%. A “risk on” accompanied with additional US monetary easing means Gold will see a slow grind up. Energy prices will continue to drop as US shale gas becomes a hot topic of discussion. Look out for overheating in the investment grade bond market by mid-year and mark your exit.