Perspectives Blog

2015 Outlook — Same song, slightly different arrangement

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 15, 2014

…s to rise in 2014. Therefore, bonds (represented by the Barclays Aggregate) delivered more return than expected. Global stocks, on the other hand, delivered less than expected. Exhibit 2: Equity returns lagged the change in corporate earnings Exhibit 2 breaks down global equity returns into the portion attributed to corporate earnings growth and the portion attributed to changes in the price/earnings (P/E) multiple (the multiple of earnings that…

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

…and Internet. In recent weeks there has been a dramatic shift in alpha generation from hyper growth technology stocks to more value-oriented names. We can attribute this to a number of factors: 1) improving economic data means a lower multiple for hyper growth stocks and higher multiples for value/cyclical names; 2) Fed Chair Janet Yellen’s reaffirmation of the taper; 3) geopolitical upheavals; 4) prime brokerage data suggests that hedge funds…

A less certain world favors high-quality stocks

Philip Dicken, Head of European Equities, Threadneedle International Ltd | October 6, 2014

…d the bond proxies to perform so well this year. We surmised that some of the more domestically-focused European stocks would outperform as the economic recovery became more embedded — a reasonable assumption given what has happened in other developed markets in recovery mode, such as the UK Therefore, we started 2014 with a bias towards higher-quality, domestically focused stocks in areas including financials, transport and leisure, media, and s…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

…we believe that corporate credit markets are not priced for a protracted period of secular stagnation. Moving to stocks we might expect that the Japanese script is pretty clear: when secular stagnation arrives, sell everything and don’t look back. But the valuation of Japanese stocks in 1989 was a world away from the valuation of U.S. stocks: the price/earnings ratio of the Topix index was 60X in 1989, and this compares to a trailing price/earnin…

Global market mid-year outlook

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

…developed regions over 2014 to date. Disclosure The MSCI World Index is an index that tracks the performance of global stocks. The JPMorgan Global Government Bond Index is a broad measure of bond performance in developed countries, including the United States. The Dow Jones-UBS Commodity Index DJ-UBSCI is a broadly diversified index that allows investors to track commodity futures through a single, simple measure. It is not possible to invest di…

Global Asset Allocation Outlook (June 2014)

Columbia Management Global Asset Allocation Team, | June 30, 2014

…onds, emerging market (EM) equities and EM bonds, and commodities are all up year to date in the range of 4%-8%. Globally diversified portfolios should continue to fare well in this environment and the global asset allocation team continues to recommend modestly overweighting equities over bonds with a neutral allocation to commodities. We upgraded U.S. stocks from an underweight to a neutral position. U.S. equity valuations relative to other cou…

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

March 10, 2014

…to lower income households helped create 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…