Perspectives Blog

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…

Japan — All in with Abenomics

Fred Copper, Senior Portfolio Manager | June 6, 2013

…ady implemented in the first few months of Abenomics have been so extreme that there is no turning back. Unless Japan can achieve much faster economic growth, Abe’s borrowing and spending radical experiment with macroeconomic stimulus will create a debt and monetary overhang so huge that it will bankrupt the financial system and quite possibly trigger hyper-inflation. In short, Abe has bet his country on the success of his economic program. He wi…

Fixed income outlook: From liquidity to growth

Gene Tannuzzo, CFA, Senior Portfolio Manager | July 10, 2013

…era of new monetary easing is over. We believe this confirms our thesis of a monetary policy inflection point in the first half of 2013, in which the Fed begins to provide the roadmap for its eventual exit from unprecedented stimulus. The market reaction has been quick and violent, but we believe this change of course by the Fed is now largely priced in. We believe the most likely next step may also be the one the market is not expecting: Growth…

Is Japan’s economic rebound for real?

Daisuke Nomoto, Senior Portfolio Manager | May 23, 2013

…calling for a 3% annual nominal gross domestic product (GDP) growth target and an aggressive monetary easing by the BOJ (The Bank of Japan) to achieve 2% inflation. The BOJ unleashed the world’s most intense burst of monetary stimulus last month promising to double the monetary base to 270 trillion yen ($2.7 trillion) by the end of 2014 to defeat deflation. How effective so far? Both “Abenomics” and “Shock and Awe Easing” have had a positive effe…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

…olls in India, Indonesia and Brazil have shown pro-reform candidates (or in Brazil’s case anyone but the incumbent) gaining steam and have acted as a catalyst for these markets. In China we have seen an announcement of a mini stimulus as well as some SOE reform (Sinopec’s announcing the sale of its marketing division). As for Russia, things have not escalated further for now but we remain very cognizant of tail risk in this market. While there ar…

What investors should know about Fed forward guidance

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

…to clarify its existing approach, and nothing more. In contrast, many academic economists argue that policymakers should use forward guidance to intentionally deviate from past behavior in order to provide additional monetary stimulus at the zero lower bound—i.e. to go “lower for longer.” In our view, forward guidance that clarifies an existing framework is more credible, because the central bank will be less likely to change its mind in the futu…

Could tapering be good for stocks?

Fred Copper, Senior Portfolio Manager | December 16, 2013

…uity and bond markets when the Fed finally does taper, which by some speculation will occur as early as this month. However, is it possible that this time could be different, that the Fed decision to slow the pace of monetary stimulus might be seen as a positive, or at least not the end of the world as we know it? There are a few reasons to believe that may be the case. First, despite all the discussion surrounding QE, there has been little theor…