Perspectives Blog

Japan — All in with Abenomics

Fred Copper, Senior Portfolio Manager | June 6, 2013

Japan has gone all-in in their battle against deflation and stagnant growth. Prime Minister Shinzo Abe has committed to a fiscal and monetary blitzkrieg, and there’s no going back. Huge uncertainty and massively divergent outcomes will manifest as continued jaw dropping volatility in the financial markets.   Price return of Nikkei Index, November 2012 — May 2013 Source: Bloomberg, May 2013, Past performance does not guarantee fut…

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…

Is Japan’s economic rebound for real?

Daisuke Nomoto, Senior Portfolio Manager | May 23, 2013

Bold monetary easing in Japan has resulted in a shift in sentiment that the Japanese economy will finally come out of the long, dark tunnel. Our research suggests that there may be a modest boost to real income in coming months, which is expected to translate into increased consumer spending. We wouldn’t be surprised if the Japanese equity market takes a breather in the near-term, but this would create a good entry for people who have missed th…

Tokyo Olympics — another driver to get out of deflation?

Daisuke Nomoto, Senior Portfolio Manager | September 13, 2013

Tokyo has been chosen to host the 2020 Summer Olympics, with an estimated economic benefit of at least $30 billion. Hosting the Olympics could bring a wide range of implications to Japan on top of the mere economic impact, including strengthening Prime Minister Abe’s leadership. The next announcement to watch for in the near term is the Japanese government’s decision how quickly they will increase the consumption tax rate. Tokyo has been chose…

Emerging Markets: Waiting on exports

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | March 31, 2014

…orld is recovering, but it has been a weak recovery. U.S. growth has not broken out of the 2%-3% range, the eurozone is no longer contracting but expectations are for growth of only about 1%, and there are questions regarding Japan’s ability to sustain any growth rebound with the advent of the new consumption tax. Global growth has simply not been strong enough to support high demand for EM exports. The question is whether a continuing gradual re…

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…

When the QE tide recedes, focus on what is revealed

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

…and the foot-draggers such as France. However, unlike the U.S., aggregate profit margins are well below prior peaks and valuations remain fairly forgiving, leaving room for upside against that backdrop of lower expectations. Japan, having suffered through almost two decades of malaise, has reasserted itself on the global stage with the bold economic policies that have become known as “Abenomics.” Abenomics has been described as having “three arr…