The year has started on a positive note. The establishment by the European Central Bank of a significant refinancing operation for the banking sector has successfully broken the downward spiral in asset prices in Europe. Equities have rallied, the euro has recovered and the yields on Italian and Spanish bonds have declined. As the euro crisis was the key concern of investors in 2011, this has led to a reversal in market leadership across all asset classes, with equities outperforming government bonds, cyclical stocks outperforming their defensive counterparts, and emerging market equities outperforming developed markets. Will this set the tone for the year ahead?