Search results for: european debt crisis

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Is Europe Heading for Japanese-style Deflation?

There are many parallels between the euro area today and Japan in the 1990s. The euro area appears to be on track to avert deflation in the short term.

Tagged with: Equities, Global Economy, Investing, Markets

Is Europe heading for Japanese-style deflation?

Although there are many differences that should ensure that the eurozone does not follow Japan‘s fate, policymakers will need to act forcefully if the risk of deflation intensifies. While the euro area appears to be on track to avert deflation in the short term, many euro countries are “one crisis away from deflation.”
The European Central Bank (ECB) claims to be ahead of the game, but policy needs to be more pro-active.

Tagged with: Global Economy, Investing

Interest rates in a highly indebted economy

In a highly indebted economy, there is no fixed cap on the level of interest rates. Any increase in interest rates must be consistent with tolerable debt service ratios, the existing stock of debt and private sector savings.

Tagged with: Economy, Fixed Income, Investing, Markets

Credit alternatives in government-backed debt

One way investors may boost yields without taking on undue credit risk is through U.S. government agency debt. While many investors associate U.S. agency debt with very low yields, other types of agency debt can offer significant spreads to Treasuries with a modest decline in liquidity.

Tagged with: Fixed Income, Investing

Ukraine Crisis — Can the U.S. make Europe less dependent on Russian gas?

As Europe looks to diversify away from its dependence on Russian gas, the U.S. is on track to start exporting liquefied natural gas by as early as next year. Russia remains the largest exporter of natural gas in the world and accounts for approximately 30% of Europe’s gas demand, half of which is transported through Ukraine.

Tagged with: Economy, Global Economy

Reducing risk — Absolute return and the pursuit of better diversification

Most investors are familiar with diversification — reducing one’s risk profile (i.e, annual volatility) without affecting return by adding different asset classes or investments to your portfolio. While this is true, the degree of risk reduction benefit depends directly upon the correlation of the portfolio’s assets.

Tagged with: Asset Allocation, Economy, Equities, Fixed Income, Markets

ECB QE – A boost for markets but not a cure of all ills

We are positive on the financial market impact of European QE if it brings down risk premia such as peripheral bond spreads. The tendency amongst investors will be to own more risk assets such as equities, particularly as the ECB’s move will help to keep interest rates low globally.

Tagged with: Global Economy, Global Perspectives, Investing

From tactical to core — The case for emerging market debt

For many investors, emerging market debt could be viewed as a core-portfolio holding rather than a short-term tactical investment. 2013’s re-pricing created value in terms of higher yields, a more dedicated investor base and a better relative value argument.

Tagged with: Fixed Income, Global Economy, Investing

Half-time report on the U.S. consumer

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.

Tagged with: Economy, U.S. Economy

A less certain world favors high-quality stocks

Current sentiment indicators do not suggest that Europe is heading back towards recession, though GDP growth will remain subdued. If Q3 sees a rebound, full QE may be unlikely this year, but any further weakness will increase the pressure on the ECB to act.

Tagged with: Economy, Equities, Global Economy, Investing, Markets
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