Cash-rich corporations are increasingly considering M&A. The market is rewarding acquirers generously (for now). How can investors position in front of potential M&A without paying an excessive premium that leaves room for disappointment? Cash balances at U.S. non-financial corporations have exploded in the post-crisis era, despite a rising return of cash to shareholders in the
Global Perspectives offers global economic, market and investment commentary on Monday morning of each week.
When economic growth levels off, the headwinds for bonds subside, which fits the patterns of 2014 so far. With bond yields at current levels, the attractiveness of interest rate risk from a valuation standpoint is meager. Should the economic data reaccelerate, we would expect equities to perform well and rate sensitive bonds to struggle. In
The rise in income inequality was a root cause of the U.S. financial crisis and the slow post-recovery period. Mediocre income gains for middle income households have contributed to the slow recovery of U.S. consumption and economic growth. As pressure continues to build to address income inequality, we expect the government to lead on this
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
The next big move in rates may be triggered by concerns about possible future Fed rate hikes. High-quality bonds may struggle to generate coupon-like returns. Emerging markets may ultimately benefit from the synchronized uptick in growth in global developed markets. With nearly two months of the year behind us, we thought now would be a
Investors could find opportunity in capital expenditures. Strategic positioning in these areas is key to opportunity. Shale gas and automation are leading the charge in innovation. Cash balances at U.S. non-financials corporations have exploded in the post-crisis era, up 75% since the end of 2007. This is despite a rising return of cash to shareholders
Conditions favor biotech outperformance of broader markets for at least a few more quarters. Outsourcing offers biotech firms varied advantages, from cost reduction to enhancing credibility. The sector’s success and the outsourcing trend is fueling ancillary businesses, notably specialty REITs, CROs and research tools companies. As biotech indices continue to surpass all-time highs, one must