Perspectives Blog

U.S. rates – Forward guidance taxonomy

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

ters most is not the details of this week’s statement, in our view, but the fundamental differences between 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…

What investors should know about Fed forward guidance

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

…e outlook is not the details of last week’s statement, in our view, but the fundamental differences between 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…

How bad is China’s credit crisis?

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

…default outright, as in our view, it would have sent a strong signal to the market by breaking the perception of 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…

When the QE tide recedes, focus on what is revealed

Robert McConnaughey, Director of Global Research | January 6, 2014

Monetary stimulus from central banks can no longer be counted on to lift asset prices For 2014 we see a market with lower cross-correlations and more divergent investment outcomes Finding alpha opportunities requires in-depth global research to take advantage of market inefficiencies While there is fierce debate on the ultimate effectiveness of monetary stimulus surging from the central banks, one cannot dispute the boost that it has given to…

Q&A with Jeff Knight

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | January 6, 2014

…ndscape. To the extent that these policies are not left in place forever, we don’t really know what the reaction will be to or the pace or the methodology of the withdrawal of the extraordinary measures being taken by central banks. So it’s really central bank policy and whether or not the central bankers can engineer the perfect withdrawal of this experimental stuff. I think you’ve got to be cognizant of the interaction between Fed policy and th…

In the land of 7 footers, 6’8″ plays guard

Fred Copper, Senior Portfolio Manager | May 5, 2014

t necessarily, and not immediately, in our view. If prices are being inflated by low risk-free rates, then it makes sense they will be deflated by higher risk free rates, and that is not a realistic concern this year. Central banks are committed to keeping rates low long enough to make sure the economic recovery is on a solid footing. Further, there are no signs of inflation, which is the typical trigger for higher rates. Eventually, however, eco…

How will the Volcker rule impact capital markets?

Richard Manuel, CFA, Senior Analyst | January 6, 2014

…Operating Committee (FSOC) finalized the last major piece of regulation called for in the Dodd-Frank Act. The Volcker Rule, named after the highly regarded former Federal Reserve Board Chairman, sought to eliminate commercial banks’ proprietary trading activity, which Chairman Volcker believed to be one of the causes of the Global Financial Crisis. In the period between the Dodd-Frank introduction of the Volcker Rule and the final language of the…