Recent market performance, particularly in September, has been negative across a widespread array of asset classes as we have seen the U.S. dollar exchange rate rise with increasing intensity in recent months. The worst returns, not coincidentally, were delivered by the very assets that have shown historically high sensitivity to dollar strength. This disruption to
Current sentiment indicators do not suggest that Europe is heading back towards recession, though GDP growth will remain subdued. If Q3 sees a rebound, full QE may be unlikely this year, but any further weakness will increase the pressure on the ECB to act. In a less certain growth environment, we believe stocks that are
Short term munis may make sense in a rising rate environment. They provide attractive yields and investment flexibility vs. cash investments and interest rate protection vs. longer assets. Cash investments have come with considerable opportunity cost in recent years. Co-authored by James Dearborn, Head of Municipal Bond Investments 2014 has offered many investment surprises, perhaps
For the right sized asset manager, disruptions in the fixed income market can create short-term opportunities. Liquidity has deteriorated in recent years and can escalate when a mega manager needs to sell a large position. The case for exercising caution around interest rates is strong, but investors shouldn’t paint all bonds with the same brush.
In Japan, there is general optimism for a steady economic recovery, with a prevailing sense of confidence in reasonable valuations and a low bar for incremental improvement. Companies that can take advantage of global business opportunities look far more attractive than those simply waiting for a rising national tide to lift their boats. A re-allocation
While inversions are not new, the pace of inversions has rapidly increased in the last few years. We believe the debate over tax policy and perceived corporate tax avoidance will only grow from here. Investors should be cautious about companies that have taken aggressive tax stances. U.S. corporate tax rates are among the world’s highest
While the bond market has generated strong returns so far in 2014, we are positioning portfolios with a shorter duration to protect against rising interest rates. Although we think that corporate bonds look better than their government counterparts, the most attractive bond market opportunities may be outside of the corporate market. Investors should remain flexible in order to