Perspectives Blog

Quality milestone in the European recovery story

March 17, 2014

…in Italy, 10% in Germany, 12% in Benelux and 7% in the UK. Interestingly France was flat, which shows that the strength of the recovery will be unequally distributed. However, from a low base, there is potential for European growth to catch-up with other faster-growing areas of the globe. Political news has provided a further boost, with the German Constitutional Court referring the ECB’s Outright Monetary Transactions policy to the European Cou…

Rebalancing the U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

Both fiscal and monetary policy will begin to normalize in 2014 The economy’s performance will be an important metric for markets as growth needs to catch up The key to getting growth beyond 2% is for business to borrow to improve/expand productive capital It’s happening again—a fourth quarter bounce in economic activity that extends into the first quarter and supports the view that growth really, finally, has started to accelerate. Such bounc…

Japan — All in with Abenomics

Fred Copper, Senior Portfolio Manager | June 6, 2013

Japan has gone all-in in their battle against deflation and stagnant growth. Prime Minister Shinzo Abe has committed to a fiscal and monetary blitzkrieg, and there’s no going back. Huge uncertainty and massively divergent outcomes will manifest as continued jaw dropping volatility in the financial markets.   Price return of Nikkei Index, November 2012 — May 2013 Source: Bloomberg, May 2013, Past performance does not guarantee fut…

Triangulating on 2014 corporate earnings

Tom West, Director of Equity Research | January 27, 2014

Estimating corporate earnings with bottom-up forecasts, top down forecasts and empirical forecasts will result in a range of outcomes While we believe bottom-up forecasts provide the best estimate, the other two methods can be useful in testing the result We look at top down build-up earnings growth for the S&P 500 and growth expectations by sector to arrive at an EPS growth estimate for 2014 I generally think the best way to build up an e…

U.S. growth — better than most estimates

Zach Pandl, Portfolio Manager and Strategist | September 6, 2013

According to our proprietary measure of U.S. activity, underlying growth was 3.4% in August after 2.2% in July (July was revised down from the preliminary estimate of 2.5% due to revisions in the payroll report). The three-month average of monthly growth rates edged up to 2.6% from 2.2% last month. As many of you know, the current narrative in the market about U.S. growth is significantly more downbeat than the message from our indicator. This r…

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

Dan Ison, Portfolio Manager | January 13, 2014

The more dramatic the economic reforms, the better the stock market performance in the eurozone We expect nominal growth to be the key driver of an improving earnings picture in Europe European equities should show further good returns to investors in 2014 As we enter 2014 there are the usual questions, conversations and strategy pieces extolling the virtues of different regions and asset classes. 2013 saw a phoenix-like resurgence in interest…

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

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

…expected to continue at a steady pace throughout this year, the timing of the Fed’s QE exit is no longer the central question in the interest rate outlook. Instead, at the start of 2014, market attention is now turning toward growth. Unlike most asset classes, government bonds and other interest rate-sensitive securities tend to perform best when the economy performs poorly—when growth and inflation are falling and the Federal Reserve eases monet…