The last six years have witnessed the most severe financial crisis since the end of World War II, with household earning capacity and saving ability experiencing significant changes due to the downturn in the real economies. This challenging economic situation definitely affected household saving behavior, although the impact has been different in various countries – for some, the impact on household earning capacity was more intense than others. (more…)
The Current Market Reality: Economic Transitions, Equities & Alternatives
At this year’s Global Investment Forum, the discussion among Pioneer investment professionals was generally positive. Of course, everyone was conscious of the current market reality: that the major force behind recent positive, though benign, market trends is the unprecedented creation of liquidity and extremely loose stance of monetary policies around the world. Monetary policy alone cannot be the only conduit to a new economic model of income growth and job creation. (more…)
Filed under: Equity Market Insights, Fixed Income Market Insights, Giordano Lombardo, Macroeconomics, Mutual Fund Industry, Political | Tagged: alternatives, diversification, economy, fiscal policy, markets, monetary policy, QE, tapering | Leave a Comment »
Recent market movements have reminded investors that the fixed income market is facing a secular change, after a 30-year-long bull market driven by a continuous decline in interest rates. I believe the announcements of the death of fixed income as an asset class are greatly exaggerated, and in order to face the new reality, fixed income investors and asset allocators need to adopt a significant change of approach. (more…)
Filed under: Fixed Income Market Insights, Giordano Lombardo, Macroeconomics, Mutual Fund Industry | Tagged: Alternative Investments, Bonds, Central Banks, Fixed Income, Interest rates | Leave a Comment »
In a recent conversation, my colleague, Tanguy Le Saout, Head of European Fixed Income, offered these thoughts on the outlook of the European economy.
What brought renewed confidence in the Eurozone’s economy?
Gross Domestic Product (GDP) increased in the second quarter after six straight declines. Data expectations were on the optimistic side, but investors appeared to become more confident before the release, thanks to encouraging evidence from supposedly reliable forward-looking indicators. The global PMI (Purchasing Managers Index) rose above 50 this summer, indicating that a majority of surveyed companies expanded their activity, with the Euro Area providing good support for the first time in two years. The PMI staged a slow recovery about a year ago, whereas GDP data have been in “recession territory” until recently. That’s why the PMI has gained a reputation for being forward-looking. (more…)
Filed under: Europe, Fixed Income Market Insights, Giordano Lombardo, Macroeconomics | Tagged: duration, ECB, Euro Debt Crisis, Eurozone, GDP, Giordano Lombardo, rising interest rates, Tanguy La Saout | Leave a Comment »
My colleagues Mauro Ratto, Head of Emerging Markets, and Yerlan Syzdykov, Head of Emerging Markets – Bond & High Yield, offered these thoughts on emerging markets.
The emerging markets (EM) bond space experienced significant changes in the last decade, surging in size, improving in quality, offering investors a composite asset class with higher liquidity, transparency and potential for diversification. (more…)
Two new important macro developments have surfaced recently, which deserve our attention for their likely impact on financial markets:
- The debate on the so-called tapering of the U.S. Federal Reserve’s (Fed) current loose monetary stance
- The changing economic outlook in China (more…)
Filed under: Equity Market Insights, Europe, Fixed Income Market Insights, Giordano Lombardo, Macroeconomics | Tagged: China, China Central Bank, China's leadership, Chinese economy, emerging markets, Interest rates, SHIBOR crisis, tapering | Leave a Comment »
The following is a result of a recent conversation I had with Mauro Ratto, our Head of Emerging Markets, here at Pioneer Investments.
China’s stock market was down very sharply in June, with banks under severe pressure. Are investors right to fear that growth is at risk?
Banks are by far the top-weighted sector group in China, so there’s little chance for the broad market to buck the trend. Indeed the problem is sector-specific at first glance. Policy makers want to curb excess bank lending in an effort to make the industry better managed and more selective. The People’s Bank of China’s attitude suggests that banks are short of money after lending too much and thus deserve punishing interest rates to cover the shortfall. That’s very draconian and so different from the way developed countries regulate their banks.
Recent data on inflation all around the world has come out lower than expected. This evolution seems to characterize the three major economic regions, although they are each experiencing different cyclical phases.
- In the Eurozone, headline inflation plunged to 1.2% YoY in April, down from 1.7% in March and 2.6% as of April last year.
- In the US, April data showed a slowing to 1.1% YoY, down from 1.5% in March and 2.3% in April 2012.
- In Japan, there was a temporary jump of deflation to –0.9% YoY in March, with National Headline CPI down from –0.6% in February and –0.4% YoY in March 2012. But it was due to a one-off effect (fall out from the comparison of 2012 incentives to buy TVs) and it should not be interpreted as a sign of deepening deflation.
Since the global financial crisis of 2008, the world has evolved in ways that are unpredictable and often unsettling for investors. Our 2013 Colloquia Series Forum, titled “Redrawing the Map: New Risk, New Reward,” was held in April in Beijing, China and brought investment experts from Pioneer Investments together with leaders from central banks, sovereign wealth funds and academic communities to discuss these issues and their implications for investments. (more…)
Filed under: Equity Market Insights, Europe, Giordano Lombardo, Macroeconomics, Political | Tagged: 2008, Central Banks, crisis, debt, depression, economy, emerging markets, equities, Giordano Lombardo, global growth, instability, investment, opportunities, recession, risk, risky, strategies | Leave a Comment »
I had the opportunity to talk with Cosimo Maracsciulo, Pioneer’s Head of European Government Bonds and Foreign Exchange, on the latest issues with Cyprus’s banking crisis. A summary of his thoughts follows.
Why did Cyprus’s financial crisis spur the European Union into action?
There are a couple of reasons worth mentioning. The first is that these smaller countries have developed, at times, a banking industry whose assets under management outgrow GDP by several times: the ratio is above 7-to-1 for Cyprus. The second reason for watching Cyprus’s liquidity crisis closely is that it may provide the first severe test of the European Union’s (EU) ability to deal with the EMU debt crisis after the European Central Bank (ECB) pledged to save the euro from collapse.