Financial markets are now questioning the time limit on an infinite QE policy and what lies beyond its expiration. While volatility and corrections are unpleasant, they can motivate investors to focus on fundamental issues such as capital investment and labor productivity. The transition from our focus on extraordinary monetary policy may be painful, but it
Insights on current market events and investment opportunities.
In a highly indebted economy, there is no fixed cap on the level of interest rates. Any increase in interest rates must be consistent with tolerable debt service ratios, the existing stock of debt and private sector savings. It’s in this context where Fed officials’ delicate approach to the exit process looks most understandable. The
Corporate profit margins can come under pronounced pressure from various forms of disruption. Firms need to invest in technology and distribution systems to support customer preferences and stay competitive. The key question is whether a company has adequately invested in next generation products, distribution or true advances in productivity. A mainstay of stock market appreciation
As a group, Millennials are intensely conservative when it comes to investments. Avoiding equities and saving cash in lower yielding, lower risk accounts is jeopardizing Millennials’ long-term financial security. Starting to save for retirement in early adulthood ensures a longer time horizon for investments to grow. Millennials, the generation in today’s workforce born after 1980,
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
The Ebola outbreak is the largest and most serious outbreak ever of this highly-contagious viral disease. Despite the scary headlines, the virus seems unlikely to spread inside the U.S. or other parts of the developed world. The focus remains on treating Ebola victims, containing the spread of the virus in Africa and preventing its intercontinental