Current Perspectives

 

Reconnecting with Energy Stocks

Plunging oil prices since mid-2014 have led many equity investors to shun energy stocks. We think that’s a mistake. By studying the aftermath of previous oil shocks, we believe investors can gain insight to prepare for a possible rebound.

Economic Perspectives

 

Consumer Revival Bolstering US Growth Prospects

US :: The US economy is getting a shot in the arm from a consumer sector that’s showing renewed vigor. This upswing should more than offset a stumbling energy sector, and it’s changing the script for economic growth patterns six years into the expansion.

Is The German Consumer Finally Waking Up?

Europe :: German consumer spending ended 2014 on a strong note. Supported by rising real incomes and high consumer confidence, we expect this trend to continue. This won’t cure all the euro area’s ills, but it does suggest that consensus growth estimates—for Germany and the region as a whole—are too low and that they’re likely to move higher in coming months.

Asia: are Financial Imbalances Still a Constraint for Monetary Easing?

Asia :: While some Asian central banks have embarked on a rate cut cycle, thanks to lower inflation resulting from falling oil prices, others remain cautious. The main concern among those hesitant central banks—the risk of causing over-leveraging and financial instability down the road—appears to be overdone, in our view.

Rising JGB Yields: Trend or Noise?

Japan :: twist to the start of 2015. It runs counter to the narrative of the Bank of Japan’s quantitative and qualitative easing program. We expect the narrative will eventually dominate, and cause yields to stabilize. Even so, the improving fundamental picture (particularly around wages growth) suggests that caution may be necessary.A sharp rise in Japanese government bond yields has given a surprise

Latin America: The Many Flavors of Monetary Policy

Latin America :: One thing Latin American countries will have in common this year is subpar growth. That means regional central banks will probably keep monetary policy loose even as they monitor exchange-rate developments. But all monetary policies aren’t alike, and we expect a rich variety of possible policy rate moves in 2015.

Easing Down Under

Australasia :: The global trend towards monetary policy easing in 2015 has also been reflected in Australia (rate cut) and New Zealand (return to neutral). Domestic developments suggest more easing to come from the Reserve Bank of Australia, while the Reserve Bank of New Zealand is likely to be more cautious.

In the News

 

Benchmark Bond Funds Worst Choice for Aussie Investors

Investors with exposure to benchmark-sensitive fixed income investments are at the greatest risk from the uncertainty arising from the end of quantitative easing and the impending global interest rate rise, according to a senior global bond portfolio manager at AllianceBernstein.