But beware of the froth. As Alistair Ross-Goobey of James Capel, a former Lamont adviser, points out, if gilts yield 10 per cent then the Footsie could be as low as 2,262 by the end of 1993. But if gilts are on 9 per cent - and dividends start to grow sooner rather than later, the index could reach the magic 3,000 mark within the next year.Reuse content
MARKETS don't like dogmatists. So the return from a slavish adherence to the ERM to old-fashioned pragmatism - implying growth, inflation and interest rate cuts timed to wow the Tory party conference early next month - was a winner. Liberated from the helplessness that has overhung it since the post-election euphoria died away, the FT-SE 100 jumped 188 points to 2,567 in two euphoric days. Even so, it is still 170 points below the post-election record set in May, when the ERM and the zero inflation goal still ruled. So, in theory, there should be more to go for.