Current Perspectives

 

Assessing the Risk of a US Economic Recession

The severe equity sell-off has raised concerns of recession in the US economy. Continued market disorder would pose a risk to the expansion at some point, but key indicators today suggest the growth cycle is still on track.

High Yield: Could the 2008 Crisis Repeat Itself?

Does the recent stress in high yield mean we’re headed for another financial crisis? We don’t think so. The probability of anything happening in markets is never zero. But in this case, it’s pretty close.

Six Questions on Emerging-Equity Turmoil

It’s been a terrible start to the year for emerging-market equities. But by maintaining perspective on long-term trends, investors can gain the comfort to stick with developing stocks, in our view.

How Well Do You Know High Yield?

Do these statistics surprise you? While it may initially seem counterintuitive, the high-yield market’s quick rebound rate after downturns actually makes sense. Its consistent, high income makes it among the most resilient asset classes.

Why “Best of Breed” Often Fails

Many investors seek “best of breed managers across each category of stocks. The logic seems compelling: Diversify your risk across categories, while choosing the best performing funds using a framework such as Morningstar’s Style Box. Unfortunately, this approach tends to deliver poor outcomes.

Economic Perspectives

 

Global Economic Outlook July 2016

Global :: The UK’s decision to leave the European Union (EU) triggered a bevy of questions: Who would succeed outgoing Prime Minister David Cameron? When would the UK formally trigger the separation process? Would the Europeans negotiate ahead of that event? Was there really a chance of a second referendum? And what would be the impact of the Brexit vote on the global economy?

2Q GDP and Benchmark Revisions: Will Past Years’ Growth Rates Be Revised Higher?

US :: Next week will see not only the first estimate for second-quarter GDP, but also revised figures for all quarters from the past three years. We expect the most recent quarter’s aggregate growth rate to be near 3%, annualized—led by a large gain in consumer spending. GDP revisions for the past three years could prove noteworthy as well, as the income side of GDP accounts argue for upward revisions to real GDP growth from 2013 to 2015.

Reassessing Post-Brexit Asian Economies

Asia :: Asia’s policymakers and investors are breathing a collective sigh of relief as Brexit appears to have caused little wreckage in the region. A resultant fund inflow and prospects of a more dovish US monetary policy are making policymakers’ jobs easier. Still, we believe that investors should remain on guard against risks of weak regional exports, as well as slower growth and reform glitches in China.

Brazil: Not So Fast

Latin America :: Eager to get inflation expectations under control, Brazil’s central bank said it won’t be easing monetary policy just yet. Given the current inflation environment and the uncertainty surrounding policy adjustments, the decision is a welcome one.

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