Perspectives Blog

Second quarter U.S. corporate earnings wrap-up

Tom West, Director of Equity Research | August 18, 2014

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 in quarterly earnings: estimates come down during the course of the quarter, and then beat the “lower…

ECB asset purchases — Bazooka or damp squib?

Martin Harvey, Fund Manager, Threadneedle International Ltd | September 22, 2014

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 that we would need to see a further significant deterioration in growth and inflation expectations to kick…

Global asset allocation outlook (as of March 2014)

Columbia Management Global Asset Allocation Team, | April 7, 2014

After significant gains in 2013, equities took a breather in the first quarter of 2014 while fixed income assets rallied. The S&P 500 Index experienced a fair amount of volatility, retreating 5.8% at the start of the year and then rallying by more than 7% to end the quarter modestly higher. Within international markets, European, emerging markets (EM) and Japanese equities lagged U.S. equities. By the end of the quarter, however, risk assets…

Q2 fixed income outlook – Hitting for the cycle

Gene Tannuzzo, CFA, Senior Portfolio Manager | March 31, 2014

We have started to reduce exposure to high-quality bonds with limited upside potential and high-yield bonds in which credit risk appears too aggressive. Following weakness last year, emerging market debt has posted gains this year, and we expect further strength ahead as volatility subsides. While we expect a flatter yield curve over the next few months as investors focus on the timing and pace of rate increases, we don’t think they should avoi…

Retail sector outlook – It’s a share game

Mari Shor, Senior Equity Analyst | March 17, 2014

We believe that many of the macro and micro headwinds experienced through 2013 will continue into 2014. Low correlations across apparel retailers and manufacturers provide opportunities to generate alpha through stock picking. Faced with structural and cyclical headwinds, apparel retailers will need global brand strength, enhanced technological capabilities and supply chain expertise to gain market share. Recent data points across the consumer…

Corporate governance – The next catalyst for Japanese equities

Daisuke Nomoto, Senior Portfolio Manager | August 4, 2014

Overhauling corporate governance to harness the power of private enterprise is critical to Japan’s growth strategy. Better engagement between corporate management and shareholders should ultimately lead to higher returns for holders of Japanese equities. We are focused on companies that can generate sustainable free cash flow, earn returns well above their cost of capital and regularly conduct shareholder friendly capital management. A critica…

Q4 fixed income outlook — External influences

Gene Tannuzzo, CFA, Senior Portfolio Manager | September 22, 2014

…as generated strong returns so far in 2014 driven largely by factors outside of the U.S. Specifically, growth in Europe has continued to surprise to the downside, pushing inflation expectations to low levels. This decline in inflation expectations has gotten the attention of the European Central Bank, who recently responded by cutting short term interest rates into negative territory, and by planning to expand their balance sheet further with tar…