Perspectives Blog

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

…at have just tipped more optimistic about both present situation and outlook. One metric that has yet to lift is consumption, which has frustrated expectations for an acceleration in consumer spending. Indeed, personal consumption expenditures have been rising at a steady but numbing (inflation adjusted) rate of about 2% annually during the entire recovery. Past recoveries have witnessed real spending gains of about 4%, excepting the recovery ear…

The role of income inequality

March 3, 2014

…largely fell under the radar in the last three decades, however, as spending inequality was less pronounced and consumption trends were less affected. This dichotomy is largely explained by the powerful expansion in the supply of and access to credit for households across the income spectrum that allowed them to smooth their consumption via increased borrowing, in combination with a steady decline in savings rates over those same years. As a res…

India’s new government fires investor enthusiasm

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

…mprove as economic activity accelerates and the new government puts incentives in place to encourage lending. 2. Consumption recovery: We are also targeting companies that should benefit from a recovery in consumer spending, particularly in urban areas where high inflation and a weak economy have dampened real wage growth. The penetration rate of vehicles is low in India, even relative to other Asian countries at 20 per 1,000 people. As consumpti…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

Despite continuing headlines of concern, EM markets have rebounded recently. In order to sustain that rally, we need to see progress on export volumes and political/economic reforms. While not universally cheap, EM equity valuations are not unreasonable and we continue to find bottom-up opportunities. A month ago, much of the news from the emerging markets (EM) was negative. We saw headlines highlighting the liquidity headwinds created by U.S….

Finding opportunity in Japan’s recovery

Robert McConnaughey, Director of Global Research | September 29, 2014

In Japan, there is general optimism for a steady economic recovery, with a prevailing sense of confidence in reasonable valuations and a low bar for incremental improvement. Companies that can take advantage of global business opportunities look far more attractive than those simply waiting for a rising national tide to lift their boats. A re-allocation towards riskier assets from the national pension funds and insurers would create very large…

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

Income inequality has tended to rise in both developed and EM. Companies look across the globe to determine where they can manufacture their products at the lowest risk-adjusted cost. We believe that the global unit labor cost arbitrage is likely to continue for many decades. By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi Asset Allocation Last week we discussed rising income inequality in developed markets and the degree to…

Lifting the U.S. oil export ban – Who wins?

Jonathan Mogil, Portfolio Manager and Senior Analyst | March 24, 2014

…producing 8.4 million barrels per day (mbpd) of oil, and importing 4.1mbpd, representing one-third of its total consumption. Over the next three decades, oil imports more than doubled, and by 2008, during the throes of the Great Recession, the U.S. was importing 66% of its total oil consumption. Since 2008, U.S. oil volumes have grown faster than anywhere else in the world as a result of the U.S. shale revolution. Oil production averaged 7.5mbpd…