Perspectives Blog

Half-time report on the U.S. consumer

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

U.S. consumers have taken a more cautious attitude toward debt and been more selective about using it for discretionary purchases. With consumers using credit cards less and using debit cards much more, the supports for higher discretionary spending are keyed off income and wages and also employment. With low debt use and income growth holding back consumption and demand, households will require stronger job growth and real wage gains to accele…

The role of income inequality

March 3, 2014

The rise in income inequality was a root cause of the U.S. financial crisis and the slow post-recovery period. Mediocre income gains for middle income households have contributed to the slow recovery of U.S. consumption and economic growth. As pressure continues to build to address income inequality, we expect the government to lead on this issue and private sector to lag. By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi asse…

India’s new government fires investor enthusiasm

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

…when the developed markets are likely to be entering a tightening phase. India’s long-term potential remains clear: the so-called “demographic dividend” of a relatively young and fast-growing working population; low levels of consumption with household penetration of many goods remaining low and giving huge scope for increased consumer spending; the potential for a big increase in infrastructure spending, which can ease structural bottlenecks; In…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

…eal pickup in exports and/or real reform momentum. For most EM countries, exports remain the most important factor in explaining long-term growth. Strong exports not only help export-oriented companies but also boost domestic consumption as exports trickle down through the economy. EM exports peaked in late 2010 and have stagnated at or below zero in recent quarters. The developed world (the core of the export consumer market) is recovering, but…

Finding opportunity in Japan’s recovery

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

…onable valuations and a low bar for incremental improvement. That said, updates on current results and corporate guidance were quite modest and may lag growing expectations. Some of that is the hangover effect from the recent consumption tax hike (claims of bad weather effects too, a globally convenient rationalization); but across a broad mix of companies, the general ability to drive revenue growth wasn’t very impressive. If there was a silver…

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

March 10, 2014

…e a financially unstable and unsustainable dynamic that culminated in the global financial crisis. We postulated that the lack of willingness on the part of banks to recreate this unsustainable dynamic would deliver a drag to consumption growth in developed markets. This week we consider the degree to which income inequality is a global phenomenon. Many countries in emerging markets (EM) have high and rising levels of income inequality with atten…

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

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

…and Conservation Act of 1975, making it illegal to export U.S. oil without a license. At that time, the U.S. was 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…