Emerging markets are at that peculiar place where everyone likes them over the long term, but very few like them in the short term. Many well-publicized headwinds from 2013 remain going into 2014, accompanied by election uncertainty in Brazil, India, Indonesia, South Africa and Turkey. And political uncertainty keeps surfacing in such places as Thailand, Turkey and the Ukraine.Read More
While most fixed income asset classes tied to interest rates saw negative returns during 2013, high yield bonds returned more than 8%, according to the JP Morgan Domestic High Yield Index. While we anticipate slightly lower returns in 2014, it looks to be a positive year for high yield markets.Read More
Since the Industrial Revolution, successful economies have exhibited five common attributes. The absence of any one of these Big Five has resulted in a substantial shortfall in performance. Comparing the BRICS on the basis of these five criteria, my subjective view is that Brazil and South Africa are best placed for long-term success, while India is not far behind. Russia and China have obvious drawbacks, but if either were to change their political systems, the outcomes could be very different.Read More
We’re seeing signs that the recovery in Europe is progressing. I wanted to take a moment to highlight some of the positives, uncertainties and opportunities that we believe investors should consider about the region:
- First, Europe appears to be past the worst of the fiscal retrenchment drag on growth. Leading economic indicators are trending up, including purchasing mangers’ indexes (PMIs) and retail sales. Effectively, this second derivative of growth is positive, not just in the US, but in Europe as well.
- Secondly, credit spreads in Europe are easing, particularly in such countries as Spain and Italy, whose spreads are at their best levels in years.
- And thirdly, consensus European earnings growth expectations of +13% to 14% for the coming year look healthy compared to consensus earnings expectations of +10% for the US.1
Overall, 2013 wasn’t the best year for Asian markets, however there are several trends emerging that we believe will be good for the region this year:
-Export growth is picking up in the region, as demand from developed nations has increased.
-China is no longer decelerating, and its economy has stabilized.
-What’s more, the Chinese government has begun implementing reforms that we believe will have positive long-term benefits.Read More
Earlier in February the Congressional Budget Office (CBO) announced that the federal budget outlook would continue to improve in 2014, with the federal deficit projected to fall from $680 billion in the fiscal year 2013, to $514 billion in fiscal year 2014 — its lowest level since President Obama took office in 2009. To give a sense of context, the deficit that year totaled a record $1.4 trillion.Read More