Perspectives Blog

Signs point to an improving U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | December 9, 2013

Data shows economy is improving Job growth is continuing GDP is not as good as the report would make you think The first week in December was a data goldmine for anyone hoping for news that the economy maintained momentum through the early autumn government distortions. The payroll report continued to post moderate and steady payroll gains consistent with a sustained improvement in labor markets. The interruption from the government shutdown i…

Is Europe heading for Japanese-style deflation?

Martin Harvey, Fund Manager, Threadneedle International Ltd | August 4, 2014

…beginning of the nineties. Exhibit 1: Relative experience of equity prices from the peak of the bubble Source: Bloomberg, March 2014. Note: t represents months before and after peak. Exhibit 2: Relative experience of nominal GDP from the peak of the cycle Source: Bloomberg, December 2013. Note t represents years before and after peak The international nature of the 2008 crisis and subsequent slow global recovery goes some way to explaining the…

A tale of two labor markets

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | November 11, 2013

…t from the shutdown, and much depends on where the participation rate settles in the next few months. This leaves me thinking the Fed will also wait and allow the foggy labor data to clear. One final note on the third quarter GDP report released this week. The advance reading of 2.8% was flattered by an inventory build which will likely reverse next quarter. The inventory contribution is always a potential swing factor and often overstates growth…

European equities – Should investors care about periphery vs. core anymore?

Dan Ison, Portfolio Manager | January 13, 2014

…certainly hinders Italy’s ability to reform. I am often reminded that despite being the world’s 8th largest economy, Italy hasn’t grown in more than a decade. While the UK has likely enjoyed the strongest European GDP growth in 2013, her equity market has lagged many of the major markets in Europe. Here we find a simple explanation — market structure. With 25% of the UK market comprising commodities and oil, and a further 28% in defen…

What should U.S. bond investors expect in 2014?

Zach Pandl, Portfolio Manager and Strategist | January 6, 2014

…nd half growth rate of 3.25% would be significantly higher than forecasters expected just a few months ago. Our proprietary measure of U.S. economic growth—which is based on a broader set of data than those used to calculated GDP—also shows growth of more than 3% in recent months. If this brisk pace continues, investors should expect further increases in longer-term interest rates. At the moment, the yield curve is being anchored down by what Fed…

The beginnings of a new moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 2, 2014

…current gross domestic product (GDP) growth target of 7.5% is more realistic — this is stabilization rather than a slowdown if we can mentally roll forward the base of comparison to 2012 and 2013. They might have to lower the GDP growth target, but barring unforeseen developments, it should not be significantly down in the next 3-5 years (such as below 6.0%). There are also encouraging developments elsewhere in Asia Pacific ex Japan. In India, Mo…

An improving outlook for European equities

Philip Dicken, Head of European Equities, Threadneedle International Ltd | October 18, 2013

…average for euro-area unemployment reached a 28-month low. How are corporates faring? Businesses have been notably reluctant to spend through the uncertain times of the European crisis and capital expenditure (as a share of GDP) is at its lowest level for more than 20 years. On top of this, merger & acquisition (M&A) activity (see Exhibit 2) is at a low level. However, there are now signs that transactional activity is increasing as bus…