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
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
With inflation expectations declining to the levels that preceded the recent shift in policy, should the ECB and the financial markets be worried? In our view, the ECB probably won’t be wholly impressed by the reaction of inflation expectations to recently announced measures, and will be keeping a close eye on favored measures. We believe
Major asset classes had nice gains through mid-June but have declined as of late. Although we still favor equities, we think it is time to bolster portfolio resilience. We are keeping our eye on Europe as the summer comes to an end. A reputation, it is said, takes a long time to build, but a
Non-cyclical sectors slightly out performed cyclical sectors during the quarter. In technology, the U.S. is improving, Europe is still not strong and developing markets lag. The healthcare sector improved, but it is still a question mark for the second half of the year. As the economic recovery matures, we have seen a fairly consistent pattern
While most equity markets had positive first half performance, we still expect modest acceleration in growth ahead for the global economy. From both a valuation perspective and investor sentiment viewpoint, Chinese, Russian and Japanese equities look cheap. Europe appears vulnerable to shifting sentiment in addition to further downward revisions to profit expectations. In our latest