Perspectives Blog

Gaps, not growth

Zach Pandl, Portfolio Manager and Strategist | February 25, 2014

Monetary policy is primarily about “gaps” not growth: the Fed is trying to reduce spare capacity in the economy, not bring about a rapid expansion per se. Despite concerns over cyclical weakness in labor force participation, the unemployment rate is sending similar signals as most other output gap proxies. The output gap improved despite a relatively slow expansion, suggesting weak potential growth. While it’s far too soon to revise any medium…

Harvesting a New Moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 23, 2014

. It is not possible to invest directly in an index. Being adapted As growth slows, companies positioned for the higher growth era in Asia found themselves carrying cost structures that could put them in danger of extinction. Capital expenditure plans had to be scaled down and ongoing expenses had to be cut. Li Ning, a sports apparel and equipment maker in China, is a company that has had to make painful adjustments — its same store sales growth

U.S. rates — play for growth

Zach Pandl, Portfolio Manager and Strategist | December 10, 2013

200k (193k this month), and the payroll diffusion indexes pointed to a broadening of gains. We were also encouraged to see a further acceleration in construction and manufacturing employment. It bears mentioning that even the large rebound in household employment leaves the three-month average gain at just +72k. The participation rate also failed to recover all of last month’s large decline, suggesting that some of the weakness reflected more tha…

Quality milestone in the European recovery story

March 17, 2014

…ical news has provided a further boost, with the German Constitutional Court referring the ECB’s Outright Monetary Transactions policy to the European Court of Justice, rather than rejecting it. This has been interpreted as a capitulation by the Germans in terms of their reluctance to support the European Union and the ECB’s backstop, and supports the bullish view of Europe’s prospects. The appointment of reformist Matteo Renzi to the Italian pre…

Rebalancing the U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

Both fiscal and monetary policy will begin to normalize in 2014 The economy’s performance will be an important metric for markets as growth needs to catch up The key to getting growth beyond 2% is for business to borrow to improve/expand productive capital It’s happening again—a fourth quarter bounce in economic activity that extends into the first quarter and supports the view that growth really, finally, has started to accelerate. Such bounc…

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

edictable annuity business with a strong recurring revenue component • Rising margins and asset turns are a powerful combination • Improvements in balance sheet items: day sales outstanding, inventory turns, deferred revenue, capitalized software • Structural changes within an industry such as consolidation Some current themes we find attractive include: • Businesses exposed to the continued move towards e-commerce • Pivot of business models towa…

Scarce growth – Can the tortoises continue to outpace the hares?

Robert McConnaughey, Director of Global Research | May 19, 2014

Recent selloff has tested stance that investors would benefit from seeking scarce growth, so long as that growth did not become wildly overvalued. We appear to be moving into a “sorting out” stage where investors begin to more granularly assess both the fundamentals and the incremental opportunities. Patience and tolerance for ongoing bouts of volatility are crucial, but we believe that investors who focus on the underlying fundamentals will ul…