Perspectives Blog

Quality milestone in the European recovery story

March 17, 2014

Business, economic and political news all point to a strengthening recovery in Europe. We foresee a period of low inflation and low interest rates in Europe. We favor domestic European plays over internationally-exposed stocks, with an overweight stance in banking and telecoms. By Paul Doyle, Head of Europe ex. UK equities and Frederic Jeanmaire, Fund Manager, Threadneedle Investments After 18 consecutive negative months, the flow of eurozone…

U.S. rates – Forward guidance taxonomy

Zach Pandl, Portfolio Manager and Strategist | March 17, 2014

The Fed’s communication for 2014 looks like the strongest type of forward guidance, one that clarifies the existing policy approach and backs up statements with some type of commitment. Current statements for 2015 and beyond are closer to the weakest type of forward guidance, a forecast that the central bank will behave in the future differently than it has behaved in the past. Look for the market’s heavy reliance on the SEP forecasts to fade o…

What investors should know about Fed forward guidance

Zach Pandl, Portfolio Manager and Strategist | March 24, 2014

…e outlook is not the details of last week’s statement, in our view, but the fundamental differences between the Fed’s forward guidance for 2014, and that for 2015 and beyond. The styles of forward guidance provided by central banks differ along two main dimensions: (1) the degree of commitment and (2) the motivation for providing guidance in the first place. Both aspects can affect credibility, and therefore the importance of these statements for…

When the QE tide recedes, focus on what is revealed

Robert McConnaughey, Director of Global Research | January 6, 2014

Monetary stimulus from central banks can no longer be counted on to lift asset prices For 2014 we see a market with lower cross-correlations and more divergent investment outcomes Finding alpha opportunities requires in-depth global research to take advantage of market inefficiencies While there is fierce debate on the ultimate effectiveness of monetary stimulus surging from the central banks, one cannot dispute the boost that it has given to…

European equities – Should investors care about periphery vs. core anymore?

Dan Ison, Portfolio Manager | January 13, 2014

nal Limited Spain and Ireland are certainly the poster children of eurozone reforms. Both have exited their troika programmes (bailouts composed by European Commission, the International Monetary Fund and the European Central Bank). Spain can easily finance itself in open markets while Ireland is preparing for its first bond sale since the bailout. Unit labor costs, a good proxy for competitiveness, have fallen significantly in these two economie…

An improving outlook for European equities

Philip Dicken, Head of European Equities, Threadneedle International Ltd | October 18, 2013

Economic data confirm that the Eurozone has exited recession. There are signs that corporate transactional activity is increasing as businesses become more financially secure. While Europe remains beset by challenges, the economic background is improving, valuations are looking more attractive and investors who have not been paying attention to European stocks may want to take a closer look. According to Eurostat, the 17 eurozone member states…

Global Asset Allocation Outlook (as of February 24, 2014)

Columbia Management Global Asset Allocation Team, | March 10, 2014

uch as Germany and France deteriorating, while those on the periphery of the continent improving. Overall, the eurozone declined somewhat on our scorecard as earnings growth weakened. Ever since the speech by European Central Bank President Mario Draghi which promised to do “whatever it takes” to support the monetary union, European markets have been willing to look through these earnings downgrades. As a result, European equities have risen in v…