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The Global Consequences of a Sino-American Cold War
What started as a trade war between the United States and China is quickly escalating into a death match for global economic, technological, and military dominance. If the two countries' leaders cannot manage the defining relationship of the twenty-first century responsibly, the entire world will bear the costs of their failure. NEW YORK – A few years ago, as part
Why Volatility Could Be Worse
Russ discusses why volatility has not been more severe, even though growth has softened. With one Sunday afternoon tweet, President Trump reintroduced what had recently vanished from financial markets: volatility. By Thursday May 9th, the VIX Index, which measures implied volatility on the S&P 500, had reached a four-month high. With a trade deal with China now in doubt, or
European Banks—Choosing the Right Layer of the Capital Structure
European Banks have mostly been magnets for bad news and disappointment for their equity holders. But we believe other parts of the banks’ capital structure offer solid returns, backed by resilient balance sheets. The Problem? Poor Profitability, Not Weak Balance Sheets European banks have been struggling to improve profitability in a persistently tough environment. Continuous low rates, a flat yield
Why Play Defense in Rising Emerging Markets?
Why should emerging-market investors exercise caution in a rising market? With big unresolved challenges, we think it’s prudent to target companies with solid fundamentals and stable business models to overcome macroeconomic uncertainty and build a resilient portfolio for the long-term. Emerging-market stocks have bounced back in 2019. After dropping more than 14% in 2018, the MSCI Emerging Markets Index was
Measuring Inflation, Celebrating Job Creation, and Watching Chinese Debt
SUMMARY Why Is Inflation So Low? The Incredible American Job Machine China’s Bad Loans Are Getting Worse According to Oscar Wilde, cynics are people who know the price of everything and the value of nothing. On a related note, I am beginning to suspect economists are people who know nothing about prices. Trends in the price level have confounded analysts
Global Growth Themes and Forecasts (Infographic)
© Loomis, Sayles & Co. This article was originally published in Advisor Perspectives. Photo: iStock
Stop Worrying about Your Portfolio
EXECUTIVE SUMMARY Investors have a tendency to focus on the characteristics of their portfolios almost to the exclusion of other factors that will lead to success or failure for the larger objective that the portfolio is intended to serve. By taking into account the characteristics of the assets and liabilities that exist outside of their investment portfolios, they could build
Explaining Inflation Inertia
Despite central bankers' concerted efforts, credible price-stability targets have proved elusive in countries like Argentina, where inflation is soaring, and Japan, which can't shake the specter of deflation. What can governments do to influence inflation expectations when central banks’ policies prove insufficient to the task? CAMBRIDGE – The stubbornness of inflation continues to challenge and mystify central bankers worldwide. Whether
Emerging Market Stocks Underperform When the US Dollar Strengthens…Here’s Why
The relationship between the performance of emerging market stocks and the US dollar is one of the tightest macro relationships that exists in investing. As we can see in the first chart, the relative performance of EM stocks vs the S&P 500 is highly negatively correlated with the level of the dollar. That is, when the dollar goes up, EMs
Leave the Renminbi Out of US-China Trade Talks
CAMBRIDGE – Will a possibly imminent US-China trade agreement exacerbate global business cycles or even plant the seeds of the next Asian financial crisis? If the eventual agreement – assuming there is one – forces China to hew indefinitely to its outmoded, overly rigid exchange-rate regime, then the answer may be yes. Keeping the renminbi’s exchange rate stable against the