Perspectives Blog

Fed outlook over the short and longer run

Zach Pandl, Portfolio Manager and Strategist | October 23, 2013

Heightened uncertainty around quantitative easing is mostly a short run problem. We see roughly flat odds of 20% for tapering at each of the next four meetings—December, January, March and April—and an additional 20% chance that the current QE pace continues beyond that. We have turned modestly more cautious about interest rate risk in our portfolios. One of the ironies of Ben Bernanke’s tenure is that he set out with a goal to improve Fed com…

What to expect from Janet Yellen’s testimony

Zach Pandl, Portfolio Manager and Strategist | February 10, 2014

Yellen’s testimony before U.S. lawmakers will help clarify how she plans to govern the committee Some investors are expecting a meaningful change in direction from the Yellen Fed We look at four reasons why we anticipate continuity with the Bernanke regime After a few bewildering weeks with Nicolas Maduro and Erdem Basci, I can’t be the only one grateful to be turning attention back to Janet Yellen. The new Federal Reserve Board Chair will mak…

Could tapering be good for stocks?

Fred Copper, Senior Portfolio Manager | December 16, 2013

…asset markets are one of their key indicators, so at the first sign of an actual deceleration, they will press back down on the monetary accelerator. In fact, Janet Yellen, the imminent successor to current Fed president Ben Bernanke, is collectively viewed as even more dovish than he. The Fed’s got our (the market’s) back. They’ve made it clear that severe/sustained economic or market declines will not be tolerated. The Greenspan/Bernanke/Yelle…

The beginnings of a new moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 2, 2014

…in Asia Pacific ex Japan equities in view of the transformation that is taking shape in the next five to 10 years? These are the questions we will explore in a series starting with the big picture conditions. According to Ben Bernanke, the Great Moderation in the U.S. was attributable to structural change, improved macroeconomic policies or simply good luck(1). Improved monetary policies have been generally accepted as an important source of the…

FOMC December meeting scouting report

Zach Pandl, Portfolio Manager and Strategist | December 16, 2013

We expect Fed officials to announce the first slowing of QE at this week’s FOMC meeting The main risk to our expectations is the still-low level of core inflation We also expect the FOMC to pair any slowing of QE with qualitative changes to its forward guidance In the press conference after the September FOMC meeting, Fed Chairman Bernanke offered three reasons for why the committee chose not to slow the pace of its bond purchases: (1) insuffi…

U.S. rates — play for growth

Zach Pandl, Portfolio Manager and Strategist | December 10, 2013

…set of job market indicators, including consumer price inflation, wage growth and measures of underemployment.” We expect that communicating the rationale for the slow pace of hiking in the SEP will prove challenging. So far Bernanke has talked about “headwinds” and a slow recovery in the neutral funds rate. Look for more of this in December—possibly in the statement itself. The QE decision looks like a close call, but on balance we think taperi…

More heat than light

Zach Pandl, Portfolio Manager and Strategist | October 3, 2013

…QE), Fed officials provided more detailed reasoning last week in public remarks and interviews with media outlets. Unfortunately, the latest comments added more heat than light to the QE debate in our view. Much like Chairman Bernanke’s post-meeting press conference, officials expressed contradictory views on several major policy questions. They also provided relatively little information about the framework that will guide the QE tapering decisi…