Low rates have distorted markets and generated unintended problems for investors and lenders. Central bankers are increasingly aware of these consequences and are slowly moving to press the pause button. It will take even more courage for them to begin to reverse the unprecedented interventions in bond and other markets.
Though valuations for Eurozone equities remain attractive, waning earnings growth and the difficult macro picture keep us neutral for now, but continuing to watch closely as US valuations push ever higher.
The vacuum being created by banks withdrawing from previous activities is opening up opportunities for strategies like non-performing loan funds focused on the region.
The market has not become too complacent and continues to register the many potential risks on the horizon.
We retain our overweight to Japanese stocks, but are watching closely to ensure economic or political events do not undermine the promising case for company fundamentals.
As more countries move from zero interest rate policy (ZIRP) to negative interest rate policy (NIRP) to try to boost growth and conquer deflation, the risks of unintended consequences are rising and investors should tread carefully.
Yes, but the amount of outperformance could be limited, and growing macro-driven volatility will likely cap the absolute level of returns.
Heading into 2016, we remain constructive on Japanese equities versus US equivalents and are broadening our recommendation to include Japanese small- and mid-cap stocks.
2015 looks likely to go down as a year to forget for many investors, and 2016 may bring only slight improvement.
Every year, we take a fresh look at the themes and drivers likely to influence capital markets and, along with our valuation analysis, inform our asset allocation recommendations. Heading into 2015, we identified five trends that influenced our advice: US dollar strength, weakening commodity prices, elevated US equity valuations, extremely low sovereign bond yields, and…