Perspectives Blog

Special report – Commodity markets outlook

Columbia Management, Investment Team | July 21, 2014

…xpect gold to lag commodities in general in the current environment. Gold does best when, not only is there geopolitical risk, but also when we have questions about whether the U.S. dollar is functioning as a credible reserve currency. At present it is, given that the U.S. is enjoying relatively strong growth and investment is flowing into the country to fund growing manufacturing and energy production. Thus in 2013, $200 billion of investment fl…

Global market mid-year outlook

Mark Burgess, Chief Investment Officer, Threadneedle Investments | June 16, 2014

…y markets have been strong and current index levels suggest that investors still have confidence in the outlook for profits. Global equities and global bonds made progress in May with the former outpacing the latter in local currency terms; for the month, the MSCI World index rose 2.34% in total return terms while the JP Morgan Global Government Bond index returned 0.87%. Commodities, which prior to May had performed very robustly, lost some gro…

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…

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…

Neutral funds rate going up?

Zach Pandl, Portfolio Manager and Strategist | May 16, 2014

The idea of low neutral funds rate has surprising currency, but could erode with more evidence of solid growth. We believe incoming information suggests the neutral funds rate would be moving higher, not lower. We see neutral funds rate at 3.75-4.00%, which implies an overvalued Treasury market. The hottest topic in the bond market at the moment is the idea that the “neutral funds rate”—where the Fed will rest short-term interest rates when th…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

…r, investors now need to look beyond corporate credit for incremental yield, and we believe that emerging market debt (EMD) offers an attractive, high-quality alternative. Emerging market debt is largely investment grade Hard currency EMD, i.e. bonds issued in U.S. dollars, is effectively a credit asset class and spreads (the yield premium) over U.S. Treasury bond yields can be more directly compared to corporate credit spreads. In fact, on a ris…