Perspectives Blog

What’s next for the U.S. dollar?

Nic Pifer, CFA, Sector Leader | July 18, 2013

The U.S. dollar has appreciated 6.6% year-to-date. The U.S. economy is much further along in the structural healing process than either Europe or Japan. We remain constructive on the outlook for the U.S. currency over the medium term, although we do expect some setbacks along the way. Year to date, the U.S. dollar has appreciated 6.6% on a trade-weighted basis. The U.S. currency has benefited this year from a growing sense that the U.S. econom…

Surveying the landscape for M&A

Robert McConnaughey, Director of Global Research | March 3, 2014

…State University* has drawn a lot of attention, particularly in the wake of some recent all stock deals in the technology sector. He goes one step further, by examining the returns of acquirers who use “over-valued” stock as currency. His work shows that these “over-valued” acquirers have historically underperformed by an even larger margin. In fairness, I find significant weakness in his definition of “over-valued” (defined in his work by stock…

Comments on the effect on global markets from the Ukraine crisis

Mark Burgess, Chief Investment Officer, Threadneedle Investments | March 12, 2014

To date, the fallout from the Ukrainian crisis has been largely confined to the emerging market debt, emerging market equity and commodity markets. At current levels, emerging market local currency debt appears to offer value, although we expect both the hard and local currency markets to remain volatile in the short term. Emerging equities reflect concerns not only around Russia and Ukraine but also the weaker growth outlook in Brazil and China…

Looking for diversification in emerging markets

Columbia Management, Investment Team | July 30, 2013

…perty insurance. In many cases, they compete with less nimble, state-controlled enterprises or enjoy favorable pricing dynamics associated with high barriers to market entry. Smaller companies also have more exposure to local currency cash flows, which can provide an additional element of diversification. This can create two big advantages: (1) These kinds of companies can better isolate the dynamism of local growth while having (2) less exposure…

Does Japan’s sell-off present buying opportunities?

Daisuke Nomoto, Senior Portfolio Manager | February 10, 2014

What’s behind the Japanese stock market’s recent correction? What’s ahead for Japan’s stock market, currency and government policy? Why the risk/reward tradeoff looks attractive at current price levels Abenomics has already had a bigger impact on the Japanese economy and financial assets than the failed attempt at quantitative easing between 2001 and 2006 (see chart). Inflation has moved back into positive territory, and household income is ri…

Slow growth: Why is it here and will it stay?

February 24, 2014

…that the neutral real rate in a number of advanced economies has fallen and may even be negative to the tune of     -2% to -3%, the world took notice. Secular stagnation is not a new idea. During the 1930s and 1940s it gained currency in academic circles before being beaten back by wave upon wave of strong post-war economic growth. But despite all of this evidence it never quite died a death: economists have observed time and again that all the e…

Take an active approach to selecting your active manager

Robert McConnaughey, Director of Global Research | April 7, 2014

…cases where managers thought they were betting on attractive sounding themes such as specific technology innovations that increase productivity, but unfortunately, a residual exposure to an unintended factor exposure such as currency fluctuation ended up being the primary driver of success or failure. A careful look at risk exposures and some basic questions can reveal whether the concentrated manager is placing bets deliberately or recklessly….