Perspectives Blog

October — It always seems to happen in October!

Ted Truscott, CEO, Global Asset Management | October 20, 2014

…rowth in Europe, Russia and China drags down U.S. and U.K. growth?  Who will ride to the rescue? Hard to believe central banks can do much more except bond buying in Europe to mimic steps taken in the U.S. Meanwhile, governments around the world have been completely tone deaf to the concerns raised by their own central bankers for many years. Policymakers around the world need to wake up and adopt substantive reform measures to support longer ter…

Is there opportunity in small-cap banks?

Jeremy Javidi, Senior Portfolio Manager | November 3, 2014

…industrial loans as a positive indication for the economy. These loans also provide the growth of assets for the banks. Given their improving profitability, discounted valuation and strong growth, we believe that small-cap banks are an increasingly attractive investment opportunity. How does one go about assessing investment opportunity in the small-cap banking sector? Let’s start by looking at the historical pattern of the Russell 2000 Value ba…

Is Europe heading for Japanese-style deflation?

Martin Harvey, Fund Manager, Threadneedle International Ltd | August 4, 2014

…in Japan and were simply rolled over, leading to the build-up of so-called “zombie companies.” Consequently, as banks were not realizing losses in a timely fashion, the subsequent recapitalization of banks that should have occurred was absent, slowing the recovery process. In Europe, there have been repeated attempts to avoid the same situation. In the crisis countries, “bad banks” have been created to remove bad loans from bank balance sheets,…

U.S. rates – Forward guidance taxonomy

Zach Pandl, Portfolio Manager and Strategist | March 17, 2014

…en the Fed’s forward guidance for 2014, and that for 2015 and beyond. The styles of forward guidance provided by central banks differ along two main dimensions: (1) the degree of commitment and (2) the motivation for providing guidance in the first place. Both aspects can affect credibility, and therefore the importance of these statements for markets. Forward guidance can take the form of an explicit commitment or a forecast. Central banks never…

What investors should know about Fed forward guidance

Zach Pandl, Portfolio Manager and Strategist | March 24, 2014

…en the Fed’s forward guidance for 2014, and that for 2015 and beyond. The styles of forward guidance provided by central banks differ along two main dimensions: (1) the degree of commitment and (2) the motivation for providing guidance in the first place. Both aspects can affect credibility, and therefore the importance of these statements for markets. Forward guidance can take the form of an explicit commitment or a forecast. Central banks never…

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

…an implicit government guarantee. China’s fast shadow banking growth is hard to slow because of the belief that banks, state-owned enterprises (SOEs) and big investments backed by local governments are too systemically important or too politically connected to fail. This perception needs to be broken in order to continue the financial market liberalization reform. However, it seems like the central government took that safest near-term route by…

To infinity and beyond!

Colin Moore, Global Chief Investment Officer | October 13, 2014

…ucture and education and an aging workforce. The headline-grabbing sub-prime mortgage issues and the behavior of banks, etc. were very important but they were and are symptoms of the structural issues. Another concept I have embraced in recent years is the valuation of equity markets based on a very simple equation: The impact of central bank policy was to reduce investor expectations of risk. If the economy began to sink again, the central bank…