Inflationary Pressures Will Moderate Some in Second Half

Consumer price inflation is above pre-pandemic trend in the United States and Europe, while producer prices are surging seemingly everywhere. Consistent with consensus forecasts, we expect mounting inflation pressures to ease by second half 2022 as demand for goods abates and supply constraints moderate.

December 2021

Is the United States Likely to Enter a Period of Stagflation?

No. While inflation could continue to run hotter than central banks expect, the US employment situation is improving, and economic growth is unlikely to stagnate.

November 2021

Has the Approaching Debt Default by Chinese Property Developer Evergrande Created Opportunities for Investors?

Yes. In recent weeks, several Chinese property developers have defaulted, and spreads on Chinese high-yield bonds have widened roughly 600 basis points (bps), taking their year-to-date loss to 18%.

October 2021

VantagePoint: China – Reassessing Risks and Opportunities

As the second largest economy in the world, China remains an important destination for global investor capital. Yet, the pace and scope of China’s regulatory crackdown are causing concern. In this edition of VantagePoint, we review the nature of regulatory developments and their impact on the investment opportunity set. We believe that dedicated, strategic allocations to Chinese assets are still warranted. Investors should carefully consider their sector exposure and evaluate managers’ capabilities in the current regulatory and geopolitical environment.

October 2021

Contagion Risk From China Evergrande Likely Low

Fears that a default by China Evergrande Group could trigger a financial crisis has led to some weakness in global equities in recent days, with the MSCI All Country World Index falling 3.5% from its peak. While Evergrande is likely to default and require a major restructuring, we view fears of a broader financial crisis as overblown.

September 2021

Catch My Drift? Active Managers’ Style Tends to Change Over Time

The style bias of actively managed growth and value equity portfolios is not typically static. In this paper, we highlight how the strength of active managers’ style signatures have moved between value and growth and propose a simple fundamental rationale for why this happens.

September 2021

Can Value Stocks Continue to Outperform the Broad Market?

Yes, we believe value stocks can resume their leadership relative to the broad market over the next six to 12 months, provided we are correct in our assessment that the economic impact of COVID-19 Delta variant will be limited in major developed markets and China.

August 2021

Does the ECB Strategy Review Represent an Overhaul of Euro Area Monetary Policy?

The results of the strategy review were more about clarifying and making explicit how European Central Bank (ECB) policy is currently run, rather than signalling a radical departure for monetary policy in the single currency bloc.

August 2021