Perspectives Blog

A tepid cyclical lift

Tom West, Director of Equity Research | April 28, 2014

…ce sales are expected to be up 5%-7% this year. Although weather conditions in the first quarter put a damper on construction activity, there were still some positive data points, and both commercial and residential construction should do well this year. Non-residential construction is looking good for 2014, with growth expectations in the 5% range, driven by strength in leading indicators like the Architectural Billings Index (ABI). Caterpillar…

What’s behind the weakness in U.S. housing?

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | March 24, 2014

…of the slowing seen in the single-family sector against a firmer multi-family segment, particularly in new home construction. Over the last year there has been a marked slowing in single-family permits and single-family starts across all regions, not just those areas suffering through a miserable winter. The reduced pace of construction is particularly noteworthy in the west, where weather was good despite tight home inventories. However, the mu…

Building better portfolios in a low return world

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | November 17, 2014

The near-zero interest rate environment has been a support for the financial markets, but as the economy normalizes so will interest rates. While we expect the bull market in equities to continue, returns will likely be far more modest over the next 10 years. For bonds we can expect returns in the range of 2%-3% going forward. For investors looking for higher returns, solutions require a non-traditional approach to portfolio construction and mu…

The U.S. labor market — Show me the money

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | November 17, 2014

It is unclear if recent improvements in U.S. labor market data are due to less slack or government-related measures to support worker income and benefits. Occupations with some scarcity of qualified labor have seen some wage pressures, but the gains are likely due to one-time minimum wage hikes. A more spirited pickup in overall wage growth is the key to a more sustained pickup in consumption and economic growth. The U.S. labor market data has…

India’s new government fires investor enthusiasm

Natasha Ebtehadj, Fund Manager, Threadneedle International Limited | September 8, 2014

…ing should see a meaningful uptick in investment. The Dedicated Freight Corridor (DFC) is one rail project under construction that will connect East and West India and at least halve delivery times while quadrupling capacity. We would expect more such projects to be launched and spending to flow through to engineering and construction businesses as well as cement companies. 4. Subsidy reductions: We expect diesel subsidies, which have already bee…

U.S. housing — A positive signal amidst the noise

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | September 29, 2014

While there has been a broad slowing in the last 15 months, the U.S. housing market has stabilized and started to recover. Homebuilders are catering to upscale buyers where financing is less of a constraint, and also building larger and more expensive homes. Housing has started to add to economic activity after stalling for the last few quarters, but the gain in traction will prove slow and sensitive to large shifts in interest rates. There ha…

Snow job!

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

The Nonfarm Payroll report for December showed weaknesses that cannot be easily dismissed. Participation rate continues to fall; in the last year the labor force shrunk by a half-million. Beyond unusual weather-related effects, discomforting trends continue to show stress in the labor markets. The Nonfarm Payroll report for December was certainly an outlier showing payrolls rose a mere 74k (far below consensus of 197k). The private sector adde…