Authored by: Wade O'Brien

Should Investors Take Advantage of Falling Equity Volatility by Protecting Against Market Drawdowns with Equity Options?

Stories about equity volatility plunging to “historical lows” have been ubiquitous in the financial press recently. When accompanied by references to above-average valuations and “over-heated” markets, the implication seems to be that investors should rush to buy protection via equity puts or volatility index options, presumably because some decline in equity markets (and thus increase…

Slowly But Surely: Investors Should Stay the Course on European Equities

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We maintain our advice to overweight European equities and underweight European bonds Macro data in Europe are slowly improving, but growth outside the Eurozone has been much stronger; corporate profits have also been lackluster but growth and/or cheaper currencies would help. European equity valuations are reasonable and reflect these weaknesses; they are attractive relative to…

Have Our Views Across Equity Markets Been Impacted by Recent Earnings Reports?

Our views across equity markets have not changed given a quiet start to the year for both developed and emerging markets stocks. Given stretched valuations in markets like the United States it may take considerably better earnings and macro data to push stocks higher, while in comparison European earnings have been more lackluster (and growth…

Japanese Equities: Neutral But Looking for an Arrow

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We maintain our neutral positioning on Japanese equities The “arrows” of Abenomics in Japan appear to be misfiring: growth is slowing, the yen has stabilized, and recent increases in inflation may prove temporary. Despite the impressive recovery in Japanese earnings they remain 30% below 2007 levels. Whether the third “arrow” of Abenomics will hit the…

Will the ECB Make a Move?

Recent comments by several ECB governors have fueled speculation that the bank might ease further at its upcoming meeting on April 3. While the Eurozone is slowly recovering, unemployment remains elevated and concerns are mounting over deflation. Near-zero interest rates limit the ECB’s options, leading some analysts to believe a more extreme step, such as…

Our View on 2014: It’s All Relative

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Looking ahead to 2014 we are focused on several key themes, among them the evolution of global monetary policy, the likelihood of European equities exceeding diminished expectations, and the headwinds, risks, and opportunities associated with emerging markets equities.

Deleveraging: Were the Fears Overdone?

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Monetary policy is an important wildcard, but deleveraging has faded as a headwind for U.S. economic growth and investors would be unwise to weigh it heavily in their investment decisions.

European Equities: Time to Focus on the Micro

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European Equities: Time to Focus on the Micro European equities trade near a record historical discount to U.S. equities; potential for a turnaround in earnings and improving macro conditions further bolster the case for an overweight position. Europe has faded from the headlines in 2013 as Federal Reserve tapering, Abenomics in Japan, and a slowdown…

Leveraged Credit: Losing Upside Potential

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Given lower yields, returns on high-yield bonds and leveraged loans are likely to taper off, but in a muddle-through or bear market environment their returns should compare favorably with those of equities.