Preparing for Fed lift-off

Size: px
Start display at page:

Download "Preparing for Fed lift-off"

Transcription

1 INVESTMENT STRATEGY & RESEARCH Investment Monthly Private Banking & Wealth Management, Europe edition, Investment horizon: 36 months, August 2015 Global investment strategy Preparing for Fed liftoff page 11 Europe investment strategy Confidence in Eurozone equities confirmed page 3 Fixed income A cautious bond market outlook ahead of the Fed page 13 Alternative investments Hedge funds still preferred page 17 This report represents the views of the Investment Strategy Department of CS and has not been prepared in accordance with the legal requirements designed to promote the independence of investment research. It is not a product of the Credit Suisse Research Department even if it contains published research recommendations. CS has policies in place to manage conflicts of interest including policies relating to dealing ahead of the dissemination of investment research. These policies do not apply to the views of Investment Strategists contained in this report.

2 Investment Monthly, Europe edition, August Editorial In this issue Europe investment strategy Confidence in Eurozone equities confirmed page 3 Europe deep dive Grexit avoided, sensible bailout agreement now paramount page 5 Michael Strobaek Global Chief Investment Officer Themes in Portfolios Themes in Portfolios page 6 Recovery of the European consumer page 8 Mandates implementation Favoring continental European stocks page 9 Giles Keating Vice Chairman of IS&R and Deputy Global CIO The market s focus has moved from the Greek crisis to upcoming Fed action, but the crisis has reignited debate over the longerterm survival of the euro. The common currency was built on a foundation of half sand and half concrete: fiscal, labor and capital market as well as banking weaknesses came alongside a central bank, which is arguably the strongest in the world. Attempts to tackle fiscal weaknesses with the Stability Pact were stifled in the mid 2000s when Germany failed to follow its rules, little was done to improve the structural issues, and grand plans for a powerful central economic authority came to nothing. So the Eurozone was deeply vulnerable when the financial crisis hit in 2007 and helped trigger the first Eurozone crisis in In response, there was a renewed attempt to build the missing foundations. A scorecard of progress would rate Banking Union quite highly, giving an A for repeated efforts on the fiscal side, but a B for results, and show Capital Markets Union and labor reforms as work in progress. More momentum in these key structural areas is needed (rather than creating a formal exit process, which could weaken the system), and indeed this is a precondition for ambitious steps like largescale issuance of Eurobonds with joint liability across countries. President Hollande has recently renewed calls for a strong central authority to which Chancellor Merkel has yet to respond, but we feel it is essential for the future of the euro that such grand plans do not distract from stepbystep reforms. Clear signals that Germany, France and their partners are working together on these can reassure investors and voters that there is renewed momentum to strengthen the euro s architecture. Our recent paper Advance or face retreat: Can the euro survive? addresses these issues in depth. Economics Monetary policy divergence reemerges as deflation risks recede page 10 Global investment strategy Preparing for Fed liftoff page 11 Special topic Federal funds rate: The market s versus the economists view page 12 Fixed income A cautious bond market outlook ahead of the Fed page 13 Equities Risks fading, but impending Fed hike keeps us neutral on equities page 15 Alternative investments Hedge funds still preferred page 17 Foreign exchange We turn positive on JPY, but cautious on CAD page 18 Forecast summary page 19 Glossary Glossary page Editorial deadline: 29 July 2015

3 Investment Monthly, Europe edition, August 2015 Europe investment strategy 3 Europe investment strategy Confidence in Eurozone equities confirmed Our main nogrexit scenario seems to be playing out, but implementation risks remain. We have strengthened our outperform view on Eurozone and Swiss equities and especially recommend the German market. Anja Hochberg CIO Europe & CH On a global level, we are seeing confirmation of a new leg of US economic reacceleration, driven by positive developments in both the housing and labor markets. We therefore continue to expect the US Federal Reserve to hike interest rates in September. In Europe, we continue to witness a gradual recovery in the Eurozone, with strong signals especially from Spain. Leading indicators such as the Purchasing Managers Indices continue to be strong and have now also turned positive for France. Next to the industrial momentum, the outlook for private consumption has further improved due to improving household income, low interest rates, pentup demand and a strong increase in credit demand and availability. Increase in European credit particularly strong in the periphery Based on the ECB bank lending survey. net percentage of banks reporting positive loan demand from firms, 2Q average Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 Source: Datastream, Credit Suisse / IDC Germany France Italy Spain In our view, the economic impact of a Grexit on the Eurozone economy would have been contained by possible strong interventions by the European Central Bank (ECB). Nevertheless, since our main scenario of nogrexit is playing out, this reduces the potential spillover to both investment and consumer sentiment. The ECB has also confirmed its very accommodative monetary policy. Even with the European economy improving, we expect given the still low inflation rates the ECB to fully carry out its QE program (quantitative easing, i.e. bond buying) in combination with ultralow interest rates. European investment strategy The prospect of continued low interest rates is still heavily influencing European investment strategy. However, while the ECB has been holding down shortterm rates, core government bond rates for Germany and France have moved up as markets have had to reprice their inflation outlooks, which were previously geared more toward a deflation scenario. Meanwhile, these longterm rates have moved closer to 1%. We still view these rates as too low, however, and see further potential for an upward correction. For investors holding core European bonds, we continue to recommend adding higheryielding bonds, e.g. from selected emerging markets or on the European periphery, where we have a preference for Italy over Spain. Given the challenges that many fixed income markets will have to deal with due to the adjustment processes and potential liquidity issues on the back of a Fed rate hike, which we expect in September, we continue to recommend more flexible investment solutions especially in the fixed income area. Next to absolute return bond funds, this includes the use of alternative investments and hedge funds in particular to increase the returns on portfolios and to dampen big swings caused by strong temporary bond market developments. Clear preference for equities over bonds Our portfolio is still characterized by our preference for equities over bonds, which we have recently increased further on a global level. First, we have passed at least for now some of the important riskcarrying milestones, which include the visible weakness in Chinese macro data and Grexitrelated market fears. With regard to China, we now observe very determined growthsupporting policies (including substantial monetary policy easing), and expect to see the first visible results in the fourth quarter. Real estate prices have already started to increase. With regard to Greece, while implementation risks will obviously continue to draw attention, our main scenario of no Grexit seems to be playing out.

4 Investment Monthly, Europe edition, August 2015 Europe investment strategy 4 The first interest rate hike by the Fed, which we expect in September, is likely to be the next milestone. However, our studies show that, while a first hike is likely to be followed by a period of higher volatility, the runup to the first hike is usually accompanied by positive equity returns. We therefore reiterate our positive stance on equities overall, but would currently not add any major new positions given the short period of this runup and the seasonally tight liquidity situation. DAX with best potential to outperform Last month, we recommended using temporary dips, especially in the European market, to add positions. Since then, our outperform view on both EMU and Swiss equities has been strengthened further by a positive view from our technical and sentiment analysis team. In both markets, an upward trend has established itself, which is also backed by our positive cyclical view. We would, however, recommend taking profits on our longstanding and successful bullish Japan view. For based investors, we therefore recommend equity positions in the Eurozone and would mainly focus on the German market. This market has still not caught up after the recent decline and should benefit from the weaker euro and global and domestic recovery. In addition, it shows a steady increase in earnings momentum with valuations that are still reasonable. From a thematic point of view, the European recovery theme is one of our favorites (see below). Italy has been one of our preferred European equity markets which, contrary to Germany, outperformed during the Greek crisis. Given the maturing rally, we would take some profits here and change our view back to a neutral. The Spanish market still seems to have potential, in our view, but the technical trend and also some valuation metrics have been downgraded in the short term, so we are maintaining our current neutral view. Contrary to our expectations, France has outperformed on the back of a recovery in earnings dynamics and some improved economic data. Having said that, the structure of the French equity market is very much driven by large firms and by a somewhat more defensive profile, especially when compared to Germany. Given the renewed potential for an European equity market rally, we continue to favor the more dynamic (higher beta) German market. Themes in Portfolios In the previous edition, we launched our Themes in Portfolios (TIPs), which are essentially Credit Suisse s most promising and easytoimplement investment ideas. In this edition, we propose the most relevant ideas for our European clients. We start with European recovery: Focus on the consumer, which features the revival of the European consumer, based on a very visible broadening of the European recovery where the domestic side, e.g. private consumption, is gaining in importance. (24/07/2015) German earnings momentum Watch a video featuring the highlights of the Credit Suisse investment strategy: Jul 05 Jul 06 Jul 07 Jul 08 Jul 09 Jul 10 Jul 11 Jul 12 Jul 13 Jul 14 DAX 12M EPS change (3M%) +/ 2 Std Dev +/ 1 Std Dev Average Source: Datastream, Credit Suisse / IDC

5 Investment Monthly, Europe edition, August 2015 Europe deep dive 5 Europe deep dive Grexit avoided, sensible bailout agreement now paramount With the agreement between Greece and its creditors on 13 July, a disorderly Grexit was avoided. Negotiations for a third 3year bailout program now begin. Creditor countries would do well to refrain from imposing austerity measures that are too strict; signaling possible debt relief in case of program compliance would probably be more helpful. Björn Eberhardt Head of Global Macro Research Successful end of negotiations brings loss of majority for Greek PM After five months of a tense game of chicken between Greece and its creditors, an agreement was finally reached that allows the country to stay in the Eurozone, and prevents a disorderly exit. For the governing SYRIZA party, the agreement has meant a dramatic aboutturn from its leftist electoral promises. As a result, its most radical representatives voted against the agreement and Prime Minister Alexis Tsipras had to rely on opposition parties to pass the legislation demanded by the creditors. The apparent loss of its parliamentary majority has already led to a reshuffling of ministerial posts and may even lead to new elections once bailout negotiations have concluded. Limited details of the agreement available so far The fiscal and structural reform measures which the Greek parliament had to pass included a harmonization and an increase in VAT rates to 23% as well as pension reforms. A second set of bills passed on 22 July. It encompassed reforms to improve the efficiency in the judicial system and implementation of EU banking union legislation. Going forward, other important areas of structural reform will be public administration and labor market legislation. In contrast to earlier bailouts, the chances that such reforms will be implemented now are somewhat better than in the past, in our view, given the combined political support from the moderate left and right. The passage of the first set of bills has secured some new financing for Greece. That said, these funds were essentially earmarked for payments to the European Central Bank (ECB) and the IMF. But the agreement has also cleared the way for Greece and its creditors to formally begin negotiations for a third bn 3year bailout package. The end of this negotiation process will see a new Memorandum of Understanding (MoU), which is scheduled to be signed before the next Greek sovereign bonds held by the ECB mature on 20 August Beware of too much austerity Apart from the likely list of demands for structural reform measures, another core part of the MoU will focus on the fiscal measures necessary to achieve debtsustainability. This will likely be the most contentious issue. Assumptions about GDP growth, fiscal revenues and projections for proceeds from public asset sales have in the past repeatedly proven to be overly optimistic. However, without such assumptions Greek debt which is estimated at 180% of GDP cannot be declared sustainable. The alternative is debt restructuring. Given pressure from the IMF for some form of debt relief and the Europeans desire to have the IMF on board, we think a debt restructuring is very likely to follow. It may not be officially included in the MoU, but may become part of the first review of the third bailout, likely to take place in October. Granting debt relief could also contribute to making the third program a success, as acceptance of the program in Greece would then likely increase. An important lesson from past bailout programs is that fiscal consolidation measures need to pay more attention to the economic environment: forcing too much shortterm austerity on an economy in recession can easily worsen debt sustainability rather than improve it. (23/07/2015)

6 Investment Monthly, Europe edition, August 2015 Themes in Portfolios 6 Themes in Portfolios Themes in Portfolios Themes in Portfolios describe Credit Suisse s most impactful investment ideas in an easy to understand overview. Coupled with clear investment solutions, the themes will help investors achieve an optimal asset allocation in their portfolios. We introduce a new theme for real estate, focused on the European recovery. Markus Stierli Head of Fundamental Micro Themes Research Fredy Hasenmaile Real Estate & Regional Research One month ago, we introduced Themes in Portfolios. The framework combines our best ideas with the traditional strategic and tactical asset allocation by selecting one or more themes for each major asset class. We cover all asset classes in a similar way, including those asset classes that are expected to underperform. Investors can thus use Themes in Portfolios to populate an entire diversified portfolio. Top Themes: Reiterating our preference for Europe Within the Themes in Portfolios framework, we pay special attention to those themes within asset classes which we expect to outperform. We designate these themes as Top Themes. We expect these ideas to perform well both as standalone ideas as well as in a portfolio context. We continue to favor Eurozone equities in general, and stocks exposed to the European recovery theme in particular. In addition, we continue to like stocks exposed to the corporate cash theme and merger arbitrage hedge funds. Due to the recent change in view on Japanese equities to neutral from outperform the Japanese governance reform theme is no longer a Top Theme. While it remains our favorite idea within Japanese equities, the theme appears less attractive as a standalone theme. Swiss small and mid caps: Momentum from rising sales While we have an overall positive view on the Swiss market, stocks of small and midsized companies currently appear attractively valued. We expect the Swiss franc to depreciate against the euro and US dollar, which may have a disproportionately positive impact on smaller companies, which are, on average, more exportoriented. Corporate cash goes to work: Buybacks, dividends, M&A In a steadily improving economic environment, companies should be further incentivized to either put their elevated levels of cash to use or return it to shareholders. Investors with varying risk appetites could benefit from gaining exposure to one or more of the three themes related to elevated levels of corporate cash: buybacks, dividends and merger and acquisition (M&A). Hedge funds: Merger arbitrage The case for M&A funds now appears particularly compelling: moderate deal premiums, a large share of cash transactions, cheap financing and full corporate coffers suggest that we are still in the early stages of the cycle. As M&A funds see their opportunity set expanding, their performance should pick up. Top Themes our highest conviction ideas European recovery: Focus on the consumer We expect macroeconomic conditions to improve, and the European Central Bank s asset purchase program should continue to support earnings. At this stage of the recovery, consumer sentiment should improve further, and the investment case for consumerrelated stocks now appears particularly strong. Introducing our real estate theme: European real estate recovery The economic recovery in Europe is helping to improve the situation in many of the regional office markets and supports real estate companies and real estate investment trust (REITs). The UK and German markets are most advanced in their real estate cycle. Vacancies in the major cities have already declined considerably, likely supporting rental growth in the coming years. We expect the rental income of listed real estate companies in these markets to increase by 2% 4% per annum (likeforlike). The slow recovery has weighed on investments in new office buildings, keeping the supply/demand imbalance alive and prolonging the real estate cycle. Office markets in Dublin, Madrid and Barcelona are improving rapidly,

7 Investment Monthly, Europe edition, August 2015 Themes in Portfolios 7 with expected rental growth of 8% 12% in the next few years. Vacancies are still elevated, but are likely to shrink markedly. While we expect the strong recovery in Spain and Dublin to continue, Italy (especially in the north) and the Netherlands have only recently passed the trough. Listed real estate companies in these countries have good prospects to see improvements in rental and capital growth. Vacancies in Amsterdam, Rotterdam and Milan have peaked, and are expected to decline gradually in the coming quarters. Local markets in France, Belgium, Austria and Eastern Europe are lagging behind. The prospects for real estate companies and REITs are not as good as in the aforementioned markets. Net additions to the stock of office space have been too elevated in the past, creating an oversupply situation. Overall, the European recovery is set to continue, although the upside potential for listed real estate companies varies considerably from one country to another. Considering this, we favor selected listed real estate companies in the UK, Germany, Spain, Ireland, the Netherlands and Italy. (24/07/2015) Themes in Portfolios at a glance Equities United States Eurozone/Europe UK Japan Switzerland Emerging markets Asia excluding Japan Other equities Other equities Cash Cash Fixed income Government Investment grade High yield EM local currency EM hard currency Other fixed income US technology: Mobility, infrastructure, security US large caps: A sustainable change in leadership European recovery: Focus on the consumer Quality British companies: Good value better operating performance Japanese equities: Governance reform unlocking shareholder value Swiss quality: Invest into companies with a proven track record Swiss small and mid caps: Momentum from rising sales Reformoriented EM oil importers Asian reflation & reform winners Corporate cash goes to work: Buybacks, dividends, M&A Developed market equities: Success with small states Advisorymanaged FX solutions Inflationlinked: An alternative to nominal bonds Time to float: Getting ready for rising US rates Defensive highyield: Manageable risk in a low interest rate environment Asian local bonds that underprice the fundamentals EM hard currency: Search for value in BRIC and Turkey Diversify your portfolio with senior loans and hybrids Alternative investments Hedge funds Commodities Real Estate Merger arbitrage: Benefiting companies and investors Commodities: Active strategies for excess returns European real estate recovery Foreign exchange Forex Forex EM hard currencies: MXN, CNH and INR Valuebased currency diversification into CAD, NOK and JPY Source: Credit Suisse

8 Investment Monthly, Europe edition, August 2015 Themes in Portfolios 8 Recovery of the European consumer The European economy is slowly recovering, driven by the weak euro, persistently low interest rates and lower energy prices. We believe that consumer sentiment is set to improve further, which is likely to favor sectors and companies with a high exposure to European consumers. In addition, exportdriven companies should benefit from the weak euro. Olivier P. Müller Investment Strategy CIO Office Europe/Switzerland The European economy is gradually recovering The European economy is gradually recovering, especially in the periphery, and demand in many endmarkets has stabilized or even improved. We think this is likely to continue as the weak euro, persistently low interest rates and low energy prices remain supportive. Further, inflation dynamics are weak, but headline inflation should increase later this year, which is positive for companies as pricing power and thus profitability should improve. European consumers expected to increase spending Since the financial crisis, European consumer demand has generally been weak. Indeed, tough austerity measures and high unemployment rates are not supportive for consumer spending. This has recently changed, however, and consumer sentiment has improved markedly. Household spending and retail sales have started to recover in the Eurozone, supported by lower oil prices and a decrease in the savings rate. We believe the European Central Bank s quantitative easing program should support a further recovery in consumption, which in turn should have a positive impact on the sales and earnings of domesticoriented European companies. So far, estimated aggregated earnings do not yet reflect a European consumer recovery. European exporters and banks expected to benefit from a recovering environment In our view, the tailwind from the weaker euro for European companies is likely to continue. Companies with a comparatively high cost base in Europe and a large share of global sales are likely to benefit the most. European banks should also start benefiting from improving consumer sentiment. Indeed, supported by low interest rates, credit demand for house purchases has risen in all major economies in most cases fairly rapidly except for France, despite slightly tightened credit conditions. Moreover, credit conditions for consumer credit continued to ease in Q1. Overall, higher loan demand is likely to more than offset weaker net interest income margins. (24/07/2015) Eurozone retail sales and consumer confidence % YoY, 6M moving average Index Retail Sales Source: Bloomberg, Datastream, Credit Suisse / IDC European Commission Consumer Confidence (rhs)

9 Investment Monthly, Europe edition, August 2015 Mandates implementation 9 Mandates implementation Favoring continental European stocks Reallocation across equity regions. Increased exposure to the Japanese yen. José Antonio Blanco Head of Global MACS Current versus neutral allocation We have decreased our equity exposure to emerging markets, where fundamentals remain weak, and we are now underweight. We are also taking decent profits and cutting back our Japanese equities exposure, where we are now neutral. We think that the Japanese stock market will not benefit from further capital repatriation, and extra stimulus from the Bank of Japan is less likely. In order to maintain an overall neutral equity allocation, we have strengthened the overweight positions in continental European stocks. The widening interest rate differential between the USA and the Eurozone, coupled with European corporate earnings growth on the back of a weakening euro, should support European equities. Traditional bond investments still look unattractive in view of the current yield levels, but especially with regard to a probable interest rate hike by the Fed later this year. Our fixedincome positioning remains cautious. We are confirming our constructive view on the US dollar, which is supported by rising interest rates, as well as the Japanese yen, which looks attractively valued. Hedge funds are our preferred subasset class in the alternative investments area. On the flip side, we are keeping our commodities exposure at an underweight level. (27/07/2015) Indicative capital allocation that may change over time; implementation in discretionary mandates may deviate slightly, depending on benchmarks, currency positions and other implementation considerations. TAA = Tactical asset allocation. Source: Credit Suisse

10 Investment Monthly, Europe edition, August 2015 Economics 10 Economics Monetary policy divergence reemerges as deflation risks recede The chances for better growth in H2 have improved. The (at least temporary) resolution of the Greek crisis reduces risks to the Eurozone recovery, while China should see increasing signs of stabilization. Inflation rates in most developed markets (DM) will likely rise toward yearend. Given further improvements in economic fundamentals, the US Federal Reserve will begin to tighten policy soon, in our view, well ahead of most other DM central banks. Björn Eberhardt Head of Global Macro Research Focus shifting inevitably to first US Fed hike In the months following its March 2015 meeting, the US Federal Reserve (Fed) had sounded more cautious regarding the start of policy normalization; this reflected both weak Q1 US data and worries over external factors (Greece, China slowdown). However, with Greece negotiating a third bailout package and China s economy stabilizing, these risks have now receded. Moreover, more recent US data suggests that economic growth has returned to slightly above the longterm trend. We should therefore see a continuation of good labor market data as well as gradually rising wage growth. Finally, inflation appears to be bottoming out and should head back toward the 2% target; conditions for the Fed to raise the policy rate in September thus appear to be increasingly falling into place (see our focus article on the US Fed). Eurozone recovery could shift into higher gear In the Eurozone, economic momentum has held up well despite several months of Greecerelated uncertainty. We expect the recovery to broaden and strengthen further, given supportive factors such as: the relatively weak /; low bond yields and commodity prices; substantially lower fiscal headwinds; sizeable pentup demand; and declining borrowing rates for small and mediumsized enterprises. This better economic outlook also suggests that deflation risks will recede further, though a return of inflation toward the European Central Bank s 2% target remains a relatively distant goal. Monetary policy will therefore remain loose for an extended period, in our view, implying that the gap in policy rates between the USA and the Eurozone could rise significantly over the quarters ahead. Slow recovery in Japan, but outlook improving Meanwhile, the Bank of Japan (BoJ) is also likely to maintain its aggressive bondbuying program well into 2016 given that both headline and core inflation are still close to zero. The economy is continuing its relatively slow recovery from the tax hikeinduced slowdown of the past quarters. That said, we expect fairly healthy growth in private consumer spending due to steady improvements in the labor market, including a pickup in real earnings growth. The BoJ therefore appears less likely to step up its bondbuying program again. China s sharp slowdown now giving way to recovery The Chinese economy which has been a drag on global growth momentum for much of the past year is finally sending signs of stabilizing growth. Most importantly, the drag from the property market seems to be abating. This improving outlook has much to do with looser monetary and credit policy. We expect more policy accommodation to follow in the coming months, thus providing additional tailwinds for the nascent recovery. Room for such measures remains, as policy rates are still substantially above the previous lows, and inflation remains subdued with risks slightly tilted to the downside. The outlook for most other emerging markets remains clouded, as low commodities prices are weighing on commodityexporters, and the prospect of a rising policy rate in the USA puts pressure on emerging markets with larger current account deficits. (24/07/2015)

11 Investment Monthly, Europe edition, August 2015 Global investment strategy 11 Global investment strategy Preparing for Fed liftoff Remain neutral on equities into first US Fed rate hike; emerging market stocks vulnerable, Japan equities now neutral; Eurozone and Swiss equity markets still preferred. Fixed income still vulnerable to repricing; ILBs less likely to outperform; stronger except against JPY. Nannette HechlerFayd'herbe Head of Investment Strategy Next stop: US Fed Just as financial markets can start to relax somewhat over Greece and China, they now need to turn their attention back to US monetary policy. Both the timing of the first interest rate increase by the Federal Reserve and the path of rates thereafter (i.e. the size and total number of rate increases) are likely to be key drivers for financial markets. Our base case is for a September liftoff and six consecutive increases of 25 basis points each by the end of Positive equity markets before, but more volatile just after the first hike Historically, stocks have typically seen modest gains ahead of, followed by drawdowns of around 5% or more after, the time of the first Fed rate hike. This is a key reason for us to retain our neutral view on equities heading into this period. Emerging market (EM) equities are particularly vulnerable to Fed moves. Moreover, despite policy easing in some EMs, broader domestic liquidity conditions remain tight in many others. Within EMs, EMEA (Europe, Middle East and Africa) stocks are registering better technical momentum and may now take the lead even if other regions have more catchup potential. Among developed markets, we continue to like European and Swiss equities best, but are neutralizing our longstanding Japanese equity outperform view after significant gains (in absolute terms Japan is up +18% YTD). Corporate governance reforms and increasing dividend yields remain a positive, but domestic drivers are weakening (the Government Pension Investment Fund reallocation into equities appears nearly complete); a stronger yen could create headwinds as well. Vulnerable bond markets; neutral ILBs Futures markets show that bond markets are not yet priced for a Fed September hike. So bond yields could still rise and we remain negative for this reason. While deflation risks were priced out in the last quarter and recent commodity price declines should keep inflation expectations from rising much, tighter US monetary policy will tend to push up real rates. We therefore think inflationlinked bonds have less scope to outperform nominal government bonds and are turning neutral. Stronger against most EM and DM currencies, but JPY could gain The should derive support from higher US interest rates. We maintain our general bullish stance, although a temporary consolidation just after the first Fed move cannot be ruled out and has often happened in the past. We remain particularly negative on both CAD and AUD versus. In contrast, JPY could be one of the few currencies to buck the trend. The Japanese economy is showing signs of revival, inflation is creeping up and the Bank of Japan is less likely to add any further easing measures because the yen is already very cheap. Moreover, capital outflows should gradually decrease as the move by domestic investors to reallocate funds to foreign assets abates. Alternative investments Hedge funds are sensitive to broad liquidity conditions. A tightening of monetary policy in the USA would weaken prospects for this asset class. But as long as this happens in a context of still fairly lax overall liquidity conditions, as is now the case, we think the impact should be limited. Commodities, particularly gold and precious metals, will tend to suffer more from higher real interest rates and a strong US dollar. We therefore retain our negative view ahead of the Fed s liftoff. (24/07/2015)

12 Investment Monthly, Europe edition, August 2015 Special topic 12 Special topic Federal funds rate: The market s versus the economists view With a first hike increasingly likely in September, markets will begin to focus on the path for the federal funds rate thereafter. How these rates move will depend on the evolution of unemployment as well as inflation and on the equilibrium real interest rate. We think the market is underestimating how high rates could go. Oliver Adler Head of Economic Research Recent statements by Federal Reserve (Fed) Chair Janet Yellen suggest that a first hike of the federal funds rate (FF) is increasingly likely to come in September. The momentum in the US economy also points in that direction. A majority of professional economists is now also in that camp. However, the market has not priced in such a move yet, with the FF futures assigning a probability of less than 50% to it. More importantly, the market and economists also differ regarding the longerterm outlook for rates. For example, the futures market currently sees FF at just about 1% at the end of 2016, while the median economists view has it at about 1.5%. The median forecast of the Fed s Open Market Committee (FOMC) stands at 1.6% for the end of 2016, and at 2.9% for the end of 2017, while the market sees rates at only 1.7% at that point. Federal funds rate: Cycles around a longerrun anchor The Fed s dual mandate to achieve full employment and steady inflation implies that FF is essentially driven by how the Fed at any point in time assesses the slack in the labor market or overall economy as well as the outlook for inflation relative to its 2% target. Both factors point toward rate hikes. However, the FF rate also needs a longerterm anchor : if rates went above it for an extended period of time, the economy would go into recession and deflation; if it were below for long, the economy would overheat. The FOMC currently sees that equilibrium value at about 3.75%, or 1.75% in real terms assuming the 2% inflation target is reached. In contrast, the market sees the real FF at or below zero all the way into Why the market may be wrong The real FF rate is strongly correlated with real GDP growth, though with lags (see chart): the Fed typically waits for the recovery to gain traction before hiking rates. Moreover, the FF rate has been below GDP growth, and even more strongly when the Fed tried to offset a slowdown in trend growth. Assuming a real GDP growth trend of 2.0% to 2.5% and real rates 1.5% below that (average since 1990), our real equilibrium FF estimate is 0.5% to 1.5%, and the nominal equilibrium at about 3.0%. For the real FF to remain at zero or lower for many more years, as the market currently assumes, the US economy would need to fall back into recession before the Fed even got properly going with hikes. Absent major shocks, this appears unlikely to us which is why we think FF will rise almost twice as fast as the market currently assumes. We see three possible causes for the market s (presumed) error: i) many false starts to this recovery: ii) repeated forecast downgrades by the Fed itself; and iii) strong global demand for US fixed income assets. (24/07/2015) Real US central bank policy rates vs. GDP % Jun 75 Jun 80 Jun 85 Jun 90 Jun 95 Jun 00 Jun 05 Jun 10 Real Fed Funds rate Real GDP growth rate Source: Datastream, Credit Suisse / IDC

13 Investment Monthly, Europe edition, August 2015 Fixed income 13 Fixed income A cautious bond market outlook ahead of the Fed European peripheral markets should see continued support from the ECB, but global benchmark yields may be vulnerable to Fed tightening. We remain cautious on IG corporates and turn neutral on ILBs due to downside risks in commodity prices. Karsten Linowsky Fixed Income Analysis European peripherals getting more support Over the past month, fixed income markets were dominated by headlines regarding Greece and the Fed outlook. After the agreement between Greece and its creditors was reached, bonds of other European peripheral countries benefited. Unless political turbulence reemerges, bonds from countries like Italy, Spain and Portugal should retain support given their yield advantage and the European Central Bank s (ECB) ongoing quantitative easing (QE) program. The frontloading of the ECB s purchases has actually been relatively limited, so the ECB may continue to be an important buyer during the summer months. The US bond market clearly has a different focus, with the Fed expected to hike rates soon for the first time in almost a decade. The divergence in monetary policy between the USA and the Eurozone should be reflected in a significant widening of interest rate differentials, especially at short maturities (see chart). At the long end, the picture is likely to remain more mixed, particularly since yields in all markets have risen since midapril. But markets may still be too complacent regarding the Fed hiking cycle. As shortterm US rates begin to rise, longterm yields still have room to the upside, in our view, so long as US economic growth holds up and inflation numbers increase, as we expect. Cautious on IG and tactically neutral on ILBs In credit markets, we remain cautious on investment grade (IG) corporates; corporate fundamentals deteriorated earlier this year on the back of strong bond issuance and an increase in leverage ratios. Credit spreads are more attractive for high yield, but we keep a neutral view, as weaker oil prices are weighing on a large market segment. The outlook has improved for European peripheral corporate bonds after the agreement with Greece and due to the ongoing support from ECB QE. In addition, the decision of the ECB to include certain governmentrelated utilities in its public sector purchasing program provides direct support. For inflationlinked bonds (ILBs), we turn neutral on a tactical basis relative to nominal bonds: ILBs were boosted relativelyin the first half of the year as longterm inflation expectations increased quite significantly, and possible downside pressure on commodity prices pose a risk going forward. On an absolute return basis, the rise in real yields that we have seen in the US market makes ILBs more attractive, though not necessarily relative to nominal government bonds. (24/07/2015) Interest rate differentials set to widen further 2year government bond yields (short term)* % US Eurozone Switzerland *Please note: Past performance is not a reliable indicator of future results. Source: Bloomberg, Credit Suisse / IDC

14 Investment Monthly, Europe edition, August 2015 Fixed income 14 Research bond recommendations ISIN Curr. Issuer Rating (1) Coupon (2) Min. denom./ inc. (in 1000) Vol. (m) Maturity Next call Price (3) YTM (%) YTC (%) Bench spread (4) US25152RYD96 DEUTSCHE BANK AG LONDON BBB+ / A (S) 1 / 1 2,000 2/ US345397XH12 FORD MOTOR CREDIT CO LLC BBB / Baa (S) 200 / 1 1,000 6/ US172967JJ16 CITIGROUP INC A / Baa (S) 1 / 1 2,000 2/ XS GLENCORE FUNDING LLC BBB / Baa (S) 2 / 1 1,000 4/ US46625HLW87 JPMORGAN CHASE & CO A / A (S) 2 / 1 2,250 6/20 05/ US37045XAY22 GENERAL MOTORS FINL CO BBB / Ba (S) 2 / 1 1,500 7/20 6/ US94974BGM63 WELLS FARGO & COMPANY A+ / A (S) 1 / 1 2,750 7/ US037833BF64 APPLE INC AA+ / Aa (S) 2 / 1 1,250 5/ USN82008AD03 SIEMENS FINANCIERINGSMAT A+ / A (S) 250 / 1 1,750 5/ US931142DH37 WALMART STORES INC AA / Aa (S) 2 / 1 1,750 4/23 01/ XS FCE BANK PLC BBB / Baa (A) 500 5/ FR RCI BANQUE SA BBB / Baa (A) 1 / / XS GOLDMAN SACHS GROUP INC BBB / Baa (A) 1 / 1 1,500 7/ XS AT&T INC BBB+ / Baa (A) 1,250 9/ XS Others CITIGROUP INC A / NR (A) 1,250 1/ XS GBP FCE BANK PLC BBB / Baa (A) / XS GBP JPMORGAN CHASE & CO A / A (S) 650 2/ XS GBP BMW FINANCE NV A+ / A (A) 1 / / XS GBP RABOBANK NEDERLAND NR / Aa (A) 1 / / XS GBP WELLS FARGO & COMPANY A+ / A (A) 750 4/ XS EM/Below IG/Sub. Debt* GBP TOTAL CAPITAL INTL SA AA / Aa (A) 1 / / XS CHF SUNRISE COMMUNICATIONS H BB+ / Ba (S) 150 / /22 03/ USG5002FAC08 JAGUAR LAND ROVER AUTOMO BB / Ba (S) 200 / / US03938LAY02 ARCELORMITTAL BB / Ba (S) 2 / / USN77608AJ19 SCHAEFFLER FINANCE BV BB / Ba (S) 200 / /23 05/ USF8586CH211 SOCIETE GENERALE BBB / Baa (S) 200 / 1 1,500 4/ AD13 UNITYMEDIA HESSEN / NRW BB / Ba (S) 200 / /25 01/ USG9372GAM09 VIRGIN MEDIA SECURED FIN BB / Ba (S) 200 / 1 1,000 1/26 01/ US251525AM33 DEUTSCHE BANK AG BBB / Ba (S) 200 / 1 1,500 5/28 05/ USF2893TAF33 ELECTRICITE DE FRANCE SA BBB / Baa (S) 3,000 perp. 01/ DE000A14J7F8 ZF NA CAPITAL BB / Ba (A) 00 1,150 4/ XS CNH INDUSTRIAL FIN S BB+ / Ba (A) 700 9/ XS BRF SA BBB / Baa (A) 500 6/ DE000A14J7G6 ZF NA CAPITAL BB / Ba (A) 00 1,100 4/ XS DUFRY FINANCE SCA NR / Ba (S) 700 8/23 8/ DE000DB7XJJ2 DEUTSCHE BANK AG BBB / Ba (A) 1 / 1 1,250 2/ DE000A14J587 THYSSENKRUPP AG BB / Ba (A) 1 / / XS UNITYMEDIA HESSEN / NRW BB / Ba (S) 1,000 1/25 01/ XS SCHAEFFLER FINANCE BV BB / Ba (S) 600 5/25 05/ XS VOLKSWAGEN INTL FIN NV NR / Baa (A) 1 / 1 1,100 perp. 03/ DE000A14J611 BAYER AG BBB / Baa (A) 1 / 1 1,300 perp. 10/ XS GAS NATURAL FENOSA FINAN BB+ / Ba (A) 00 1,000 perp. 11/ XS TOTAL SA A / Aa (A) 2,500 perp. 02/ XS GENERALI FINANCE BV NR / Ba (A) 1,500 perp. 11/ XS GBP JAGUAR LAND ROVER AUTOMO BB / Ba (S) 400 3/ XS GBP VIRGIN MEDIA SECURED FIN BB / Ba (S) 387 1/25 01/ The table shows a selection of BUYrated bond recommendations. We focus on the bonds currently offering reasonable liquidity and / or bonds that offer an attractive yield / spread taking into consideration relevant issuer specific risks. *Emerging Markets / Below Investment Grade / Subordinated Debt; 1) S&P, Moody's, e = expected rating, NR = not rated; 2) A = annual coupon, S = semiannual coupon, Q = quarterly coupon 3) Indicated prices as of 28 July 2015, indicative only and subject to normal market volatility. 4) Bench spreads refer to the spread in yields between either YTM or YTC and the relevant government benchmark bond. Past performance is not an indicator of future performance. Performance can be affected by commissions, fees or other charges as well as exchange rate fluctuations. More information on the forecasts and estimates is available on request. Source: Bloomberg, Credit Suisse

15 Investment Monthly, Europe edition, August 2015 Equities 15 Equities Risks fading, but impending Fed hike keeps us neutral on equities We remain neutral on equities overall. Regionally, we turn neutral on Japan and shifting our view on EM to underperform. We are still positive on EMU and Switzerland. With 30% of the S&P 500 market capitalization having reported results, positive topline growth is an encouraging development. Gérald Moser Head of Equity Analysis We remain neutral on global equities Global equity returns were flat over the past month, but with significant differences in regional performance. Switzerland, the Eurozone and Japan, the three markets we preferred over that period, outperformed, while commodityrelated markets, such as Canada, emerging markets (EM) and the UK, suffered from a renewed setback in commodity prices. The Credit Suisse Investment Committee (IC) has decided to keep its neutral stance on equities. While some risks have receded (Greece, Chinese equities), we expect heightened volatility as the Federal Reserve starts hiking rates in September. However, equities have generally resumed an uptrend one to three months after the first hike. Therefore, we would look for a better entry point to increase exposure to equities once the hiking cycle has started. Neutral view on Japan; more negative on EM On regional strategy, the IC decided to neutralize its positive view on Japan. This was based on a shift in asset allocation by large pension funds to domestic equities, attractive valuation, supportive monetary policy, a recovery in growth and reforms to enhance corporate governance. While the positive case remains largely intact, the strong performance (around 20% yeartodate) means Japanese equities are running ahead of fundamentals. The IC also decided to change its view on EM from neutral to underperform. The shortterm outlook for commodities remains challenging, and some EM countries continue to face significant domestic economic issues. In the past, the start of a new hiking cycle by the Fed also coincided with a period of underperformance by EM. Although EM has underperformed for some time, valuations are not yet cheap, as earnings continue to be downgraded. We remain positive on EMU and Switzerland. MSCI EM has underperformed after the start of a new hike cycle MSCI EM vs. MSCI world average performance before and after the first Fed hike (number of days). 12% 10% 8% 6% 4% 2% 0% 2% 4% 6% MSCI EM vs. MSCI World (Avg. perf. days before/after first Fed rate hikes) Please note: Past performance is not a reliable indicator of future results. Source: Datastream, Credit Suisse Still early, but encouraging US earnings season so far We remain neutral on US equities. The US market has usually underperformed around the first Fed hike, but we think risks in EM are significantly greater. Moreover, results in the current earnings season are relatively encouraging. As of 23 July, around a third of the S&P 500 s market capitalization has reported. The average earnings surprise, while slightly below the 10year average, is comfortably positive. More notably, the topline (sales) results, which had been weak in the past two quarters, are positive and above the longterm average. (29/07/2015)

16 Investment Monthly, Europe edition, August 2015 Equities 16 Global equity sector strategy and top picks from Research (36 months) Sector view Energy (N) Materials (N)# Industrials (U)# Consumer discretionary (O)# Consumer staples (U) Healthcare (O) Financials (N)# IT (N) Telecom services (N)# Utilities (U) Industry view Energy (N) Chemicals (U) Construction Materials (N)# Metals & Mining (N)# Pulp & Paper (U) Capital Goods (U) Commercial Services & Supplies (N) Transportation, incl. Logistics (N)# Automobiles & Components (O) Consumer Durables & Apparel, Textiles, Apparel & Luxury (O)# Hotels, Restaurants & Leisure (N) Media (N) Retailing (N) Food & Staples Retailing (U) Beverages (N) Food Products (U) Tobacco (N) Household & Personal Products (U) Healthcare Equipment & Services (O) Biotechnology (O) Pharmaceuticals (O) Banks (N)# Diversified Financials (N)# Insurance (U) Real Estate (N) Software & Services (O) Technology Hardware & Equipment (U) Semiconductors & Semiconductor Equipment (N) Diversified Telecoms (N)# Wireless Telecoms (N)# Utilities (U) Europe (O) / UK (N) Royal Dutch Shell International Consolidated Airlines, Airbus Continental, Daimler Carrefour Heineken, AnheuserBusch In Bev Reckitt Benckiser Fresenius SE Ipsen, Stada ING Groep AXA, Aviva SAP Orange, Telefonica SSE+ Switzerland (O) Clariant, Lonza Geberit Flughafen Zuerich Nestlé Novartis, Roche Logitech USA (N) Schlumberger Intl. Flavors & Fragrances+ Honeywell International Delphi Automotive Nike Walt Disney+ Home Depot Procter & Gamble Medtronic, Zimmer Biomet+ Gilead Sciences AbbVie JPMorgan Chase & Co Facebook, Google+, VMware+ Emerging Markets (U)# China Communications Construc.+ Bank of China, BPMB (Bank Pembangunan) Japan (N)# / Australia (N) / Others Toray Industries JFE Hldgs Toyota Motor CSL Limited OCBC, Sumitomo Mitsui AIA Group+ CDL Hospitality, China Overseas Land & Invest, Sun Hung Kai Property Samsung Electronics, Hon Hai Precision This is our sector strategy and top picks as of 28 July 2015 recommended by Credit Suisse, Private Banking and Wealth Management division. Our sector/industry strategy shows our sector/industry preferences with recommendations relative to regional benchmarks: Global: (MSCI World in ), Europe (MSCI Europe in ), Switzerland (Swiss Market Index in CHF), USA (S&P 500 in ), Asia/Pacific (MSCI AC Asia/Pacific in ). An outperform (underperform) view is a recommendation to invest more (less) than in a neutral position indicated by the marketcap weights of the respective benchmarks. The sector/industry weights as well as the neutral positions in figures are available upon request; please contact your relationship manager. The Top Picks is a selection of our favorite stocks within our coverage. The selection was made to reflect the sector/industry and regional preferences. Regular full updates are provided via our Investment Monthly publications as well as in our Equity Research reports. Additionally, we publish our adds and drops in our Investment Daily publication. Legend: (O) = Outperform, (N) = Neutral, (U) = Underperform. Changes are marked as follows: (+) = additions to the Top Picks, (#) = changes to sector/industry/country weightings. For further information, including disclosures with respect to any other issuers, please refer to the Credit Suisse Global Research Disclosure site at: Please note that trading facilities in certain securities may be limited. Source: Credit Suisse

17 Investment Monthly, Europe edition, August 2015 Alternative investments 17 Alternative investments Hedge funds still preferred Hedge fund performance expected to pick up as opportunity set broadens. Real estate is a mixed bag, while commodities remain weakest link. Stefan Graber Head Alternative Investment Strategy Alternative investments remain on a diverging path, with hedge funds best positioned, in our view. The real estate and commodity markets are more exposed to the likely start of a policy tightening cycle in the USA. In addition, commodities are suffering from a strengthening, deleveraging and physical surpluses, which is why this segment remains the least preferred. Real estate: REITs bounce back in July We have a neutral overall view on real estate. After having suffered from the recent rise in benchmark yields, real estate investment trusts (REITs) managed to bounce back when Greecerelated risks eased. That said, US REITs are likely to be vulnerable and more volatile once the Federal Reserve starts hiking rates. We therefore now have an underperform view on US REITS within the asset class, but maintain our preference for the UK and Japan. We also shifted our stance on Swiss real estate funds to neutral after the selloff. (29/07/2015) Hedge funds: Dipping lately but outlook remains friendly The Credit Suisse Hedge Fund Index suffered a 1.3% dip in June amid broader event riskrelated pressure across asset classes. This brought yeartodate performance to 2%*. Meanwhile, our barometer, which tracks financial market conditions for hedge funds, has recently improved, and points to a supportive overall backdrop. This prompts us to raise our fullyear total return expectation for hedge funds from 4% 6% to 5% 7%. Forthcoming policy divergences, in combination with elevated volatilities in some market segments, provide a broader opportunity set for managers. Tactical strategies, which include global macro and managed futures, should be able to perform well, while we also like the longshort equities approach. Merger arbitrage is another area of focus, as the recent pickup in merger and acquisition activity and moderate average deal premia bode well for this style. Commodities: Under renewed pressure Commodity markets were allowed a breather through June before selling pressure resumed in early July. Energy and metals markets in particular suffered declines as oversupply situations proved stickier than thought. We retain a negative outlook for commodities as rebalancing is taking more time in the current sluggish growth environment. Gold remains particularly vulnerable to further increases in US Treasury yields and continued strength. *Performance relates to the period from 1 January To 30 June 2015 (note that past performance is not a reliable indicator of future results.) Alternative investments continue to diverge ember 2003 to June Indexed performance in, January 2004 = Commodities (Credit Suisse Commodity Benchmark) Real Estate (Global REITS) Hedge funds (DJ Credit Suisse Hedge Fund Index) Please note: Past performance is not a reliable indicator of future results. Source: Bloomberg, Credit Suisse / IDC

18 Investment Monthly, Europe edition, August 2015 Foreign exchange 18 Foreign exchange We turn positive on JPY, but cautious on CAD We are now more positive on JPY, while still holding a positive view. We see CAD tactically weaker. EM currencies likely to remain under pressure against. We still prefer INR, CNY and MXN. Luca Bindelli Head of Foreign Exchange Analysis JPY offers value, while has room to appreciate The posted broadbased gains over the past month as markets renewed their focus on relative fundamentals and monetary policy. Markets are still pricing a later liftoff by the Federal Reserve (Fed) than we are. If markets shift to a September hike, as we expect, the should garner further support. How far the appreciates thereafter will depend on the level it has reached by then, as well as on the scope and pace of further Fed tightening. While the is more or less fairly valued at the moment, and a further appreciation of around 10% would be needed to make it significantly overvalued. As regards /, policy divergence between the Fed and the European Central Bank (ECB) will remain a primary factor undermining the. While the focus on the Greek crisis is fading, ECB policy easing will keep pressure on interest rate spreads and thereby also limit support for /CHF. We remain neutral on /CHF on a tactical horizon. As the Japanese economy improves further, the Bank of Japan is, in our view, unlikely to further expand its quantitative easing measures. Moreover, Japanese outflows, which previously weakened the JPY, are likely to fade, in our view. Overall, extremely cheap valuations now make the JPY attractive to hold. Meanwhile, the Canadian economy has seen unexpectedly weak data and the central bank responded with a rate cut, while downgrading its economic outlook. With oil price risks tilted to the downside, we think it is appropriate to be cautious on the CAD. We have turned negative on CAD vs., but expect the CAD to move sideways for some time against both the and CHF. Similar risks on the commodity and central bank front will likely continue to weigh on the AUD and NZD. Downward momentum building in EM FX Emerging market (EM) currencies weakened again recently. The main drivers were higher risk aversion due to worries over Greece as well as the Chinese economy and its markets, and renewed downward pressure on commodity prices. Countries with external deficits, such as the ZAR, BRL and TRY should continue to remain under pressure, not least if US interest rates rise. Countries where the business cycle is weak and inflation is low should also continue to see their currencies weakening. The KRW falls into this category. The general strengthening of the should continue to keep pressure on the EM currency universe; our technical ratings for EM FX, which have been downgraded, also point in this direction. The MXN could also see renewed shortterm weakness vs. the due to deteriorating technical momentum. We thus remain cautious overall on EM, but still believe that the MXN, CNY, and INR offer the most attractive EM exposure on a relative basis. We also like these currencies against the and CHF. (29/07/2015) 2year swap spread vs. tradeweighted index in % Jun Jun Jun Jun Jun 15 2 year weighted swap spread tradeweighted index Please note: Past performance is not a reliable indicator of future results. Source: Bloomberg, Datastream, Credit Suisse / IDC Index

19 Investment Monthly, Europe edition, August 2015 Foreign exchange 19 Forecast summary More information on the forecasts and estimates is available on request. Past performance is not an indicator of future performance. Performance can be affected by commissions, fees or other charges as well as exchange rate fluctuations. (29/07/2015) Short interest rates 3M Libor / 10year government bonds in % CHF * GBP AUD JPY 3M Libor Spot M 0.8 to M 0.8 to Y Spot M M Spot rates are closing prices as of 28/7/2015. Forecast date: 24/7/2015. * 3M Euribor, ** 3M Bank Bill rates. Equities Index MSCI AC World** US S&P 500 Eurostoxx 50 UK FTSE 100 Japan Topix Australia S&P/ASX 200 Canada S&P/TSX comp Switzerland SMI MSCI Emerging markets** Spot 915 2,093 3,554 6,555 1,629 5,585 14,077 9,276 97,434 P/E Div. y. (%) Prices as of 28/7/2015; *forecast; **gross return (incl. dividends). Commodities Source: Bloomberg, Credit Suisse 3M* 935 2,110 3,750 6,700 1,670 5,600 14,300 9, ,000 12M* 1,000 2,200 4,000 7,000 1,750 5,850 14,900 10, ,000 Source: Datastream, Credit Suisse Credit: Selected Indices BC IG Corporate BC IG Corporate BC IG Financials CS LSI ex govt CHF BC High Yield Corp BC High Yield Pan JPM EM hard curr JPM EM local curr hedg. Yield (%) Spread (bp) n.a. Duration (years) M forecast 0.5% 0.8% 0.1% 0.6% 0.5% 0.6% 0.5% 0.5% 12M forecast 0.1% 0.4% 0.9% 1.3% 1.8% 2.8% 3.4% 4.0% BC = Barclays Capital, IG= Investment Grade, CS = Credit Suisse, JPM = JP Morgan (EMBI+ and GBI Gl. Div). Index data as of 28/7/2015. Foreign exchange / /CHF /CHF /JPY /JPY /GBP GBP/ AUD/ /CAD /SEK /NOK /PLN /CNY /SGD /KRW /INR /BRL /MXN Spot Spot rates: London close 28/7/ M Source: Bloomberg, Credit Suisse 12M Source: Bloomberg, Credit Suisse Gold (/oz) Silver (/oz) Platinum (/oz) Palladium (/oz) Copper (/ton) WTI Crude Oil (/bbl) Bloomberg Commodity Index Spot prices: New York close 28/7/2015; *forecast. Spot 1, , M* 12M* 1,050 1, , ,200 5, Source: Bloomberg, Credit Suisse Real GDP growth and inflation in % CH EMU USA UK Australia Japan China GDP growth E E Inflation E E Forecast date: 23/7/2015. Source: Credit Suisse

20 Investment Monthly, Europe edition, August 2015 Glossary 20 Risk warnings Market risk Bond risks Emerging markets Hedge funds Commodity investments Real estate Currency risks Financial markets rise and fall based on economic conditions, inflationary pressures, world news and businessspecific reports. While trends may be detected over time, it can be difficult to predict the direction of the market and individual stocks. This variability puts stock investments at risk of losing value. Investors are exposed to interest rates, currency, liquidity, credit market and issuer fluctuations, which may affect the price of bonds. Emerging markets are located in countries that possess one or more of the following characteristics: a certain degree of political instability, relatively unpredictable financial markets and economic growth patterns, a financial market that is still at the development stage or a weak economy. Emerging market investments usually result in higher risks as a result of political, economic, credit, exchange rate, market liquidity, legal, settlement, market, shareholder and creditor risks. Regardless of structure, hedge funds are not limited to any particular investment discipline or trading strategy, and seek to profit in all kinds of markets by using leverage, derivative instruments and speculative investment strategies that may increase the risk of investment loss. Commodity transactions carry a high degree of risk and may not be suitable for many private investors. The extent of loss due to market movements can be substantial or even result in a total loss. Investors in real estate are exposed to liquidity, foreign currency and other risks, including cyclical risk, rental and local market risk as well as environmental risk, and changes to the legal situation. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the investor s reference currency. Source: Credit Suisse Explanation of indices frequently used in reports Index MSCI World US S&P 500 Eurostoxx 50 UK FTSE 100 Japan Topix Australia S&P/ASX 200 Canada S&P/TSX comp Switzerland SMI MSCI Emerging Markets BC IG Corporate BC IG Corporate BC IG Financials CS LSI ex govt CHF BC High Yield Corp BC High Yield Pan JPM EM hard curr. JPM EM local curr hedg. CS Hedge Fund Index DXY Comment MSCI World is an index of global equity markets developed and calculated by Morgan Stanley Capital International. Calculations are based on closing prices with dividends reinvested. Standard and Poor's 500 is a capitalizationweighted stock index representing all major industries in the USA, which measures the performance of the domestic economy through changes in the aggregate market value. Eurostoxx 50 is a marketcapitalizationweighted stock index of 50 leading bluechip companies in the Eurozone. FTSE 100 is a marketcapitalizationweighted stock index that represents 100 of the most highly capitalized companies traded on the London Stock exchange. The equities have an investibility weighting in the index calculation. TOPIX, also known as the Tokyo Stock Price Index, tracks all large Japanese companies listed in the stock exchange's "first section." The index calculation excludes temporary issues and preferred stocks. S&P/ASX 200 is an Australian marketcapitalizationweighted and floatadjusted stock index calculated by Standard and Poor's. The S&P/TSX composite index is the Canadian equivalent of the S&P 500 Index in the USA. The index contains the largest stocks traded on the Toronto Stock Exchange. The Swiss Market Index is made up of 20 of the largest companies listed of the Swiss Performance Index universe. It represents 85% of the freefloat capitalization of the Swiss equity market. As a price index, the SMI is not adjusted for dividends. MSCI Emerging Markets is a freefloatweighted Index designed to measure equity market performance in global emerging markets. The index is developed and calculated by Morgan Stanley Capital International. The Euro Corporate Index tracks the fixedrate, investmentgrade, eurodenominated corporate bond market. The index includes issues that meet specified maturity, liquidity and quality requirements. The index is calculated by Barclays. The US Corporate Index tracks the fixedrate, investmentgrade, dollardenominated corporate bond market. The index includes both US and nonus issues that meet specified maturity, liquidity and quality requirements. The index is calculated by Barclays. The IG Financials Index tracks the fixedrate, investmentgrade, dollardenominated financials bond market. The index includes both US and nonus issues that meet specified maturity, liquidity and quality requirements. The index is calculated by Barclays. The Liquid Swiss Index ex govt CHF is a marketcapitalized bond index representing the most liquid and tradable portion of the Swiss bond market excluding Swiss government bonds. The index is calculated by Credit Suisse. The US Corporate High Yield Index measures denominated, noninvestment grade, fixedrate and taxable corporate bonds. The index is calculated by Barclays. The Pan European High Yield Index measures the market of noninvestment grade, fixedrate corporate bonds denominated in euro, pound sterling, Norwegian krone, Swedish krone and Swiss francs. The index is calculated by Barclays. The Emerging Market Bond Index Plus tracks the total return of hardcurrency sovereign bonds across the most liquid emerging markets. The index encompasses USdenominated Brady bonds (dollardenominated bonds issued by Latin American countries), loans and Eurobonds. The JPMorgan Government Bond Index tracks local currency bonds issued by emerging market governments across the most accessible markets for international investors. The Credit Suisse Hedge Fund Index is compiled by Credit Suisse Hedge Index LLC. It is an assetweighted hedge fund index and includes only funds, as opposed to separate accounts. The index reflects performance net of all hedge fund component performance fees and expenses. A measure of the value of the US dollar relative to the majority of its most important trading partners. The US Dollar Index is similar to other tradeweighted indices, which also use the exchange rates from the same major currencies. Source: various index providers, Credit Suisse

October 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy

October 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy October 2015 Market Volatility likely to Remain Elevated on China Growth Concerns & Fed Rate Uncertainty. Stocks

More information

Global Markets Update Signature Global Advisors

Global Markets Update Signature Global Advisors SIGNATURE GLOBAL ADVISORS MARKETS UPDATE AUGUST 3, 2011 The following comments come from an internal interview with Chief Investment Officer, Eric Bushell. They represent Signature s current market views

More information

2015Q1 INVESTMENT OUTLOOK

2015Q1 INVESTMENT OUTLOOK TTG WEALTH MANAGEMENT 2015Q1 INVESTMENT OUTLOOK TABLE OF CONTENTS Contents 2015Q1 Core Asset Allocation Summary 1 2015Q1 Satellite Asset Allocation Summary 2 2014 Year-End Review 3 Investment Outlook for

More information

Statement by. Janet L. Yellen. Chair. Board of Governors of the Federal Reserve System. before the. Committee on Financial Services

Statement by. Janet L. Yellen. Chair. Board of Governors of the Federal Reserve System. before the. Committee on Financial Services For release at 8:30 a.m. EST February 10, 2016 Statement by Janet L. Yellen Chair Board of Governors of the Federal Reserve System before the Committee on Financial Services U.S. House of Representatives

More information

2013 GSAM Insurance Survey & Industry Investment Trends

2013 GSAM Insurance Survey & Industry Investment Trends Global Insurance Asset Management AASCIF Annual Workshop Fall 23 23 GSAM Insurance Survey & Industry Investment Trends Michael Siegel, PhD Global Head of GSAM Insurance Asset Management September 3, 23

More information

Economic & Market Outlook

Economic & Market Outlook Monthly Portfolio Commentary December 31, 2015 Economic & Market Outlook Stocks rebounded in 2015 s fourth quarter, but provided little reward for the year as a whole. The S&P 500 Index recovered from

More information

FINANCIAL REPORT - MARCH 2015

FINANCIAL REPORT - MARCH 2015 FINANCIAL REPORT - MARCH 2015 SUMMARY OF THE MACROECONOMIC INFORMATION The macroeconomic scenario Deflation in Europe, the USA well. The passage of years is very positive for the United States: the positive

More information

How Smaller Stocks May Offer Larger Returns

How Smaller Stocks May Offer Larger Returns Strategic Advisory Solutions April 2015 How Smaller Stocks May Offer Larger Returns In an environment where the US continues to be the growth engine of the developed world, investors may find opportunity

More information

2013 global equity outlook: Searching for alpha in a stock picker s market

2013 global equity outlook: Searching for alpha in a stock picker s market March 2013 2013 global equity outlook: Searching for alpha in a stock picker s market Saira Malik, Head of Global Equity Research, TIAA-CREF Executive summary The outlook for equity markets is favorable

More information

First Quarter 2015 Financial Market Commentary April, 2015. Stocks Hit New Highs in a Volatile Quarter

First Quarter 2015 Financial Market Commentary April, 2015. Stocks Hit New Highs in a Volatile Quarter Hit New Highs in a Volatile Quarter Stock investors in the U.S. and around the globe had plenty to cheer about during the first quarter of 2015 as at least 17 world stock indexes set news highs due to

More information

Why Treasury Yields Are Projected to Remain Low in 2015 March 2015

Why Treasury Yields Are Projected to Remain Low in 2015 March 2015 Why Treasury Yields Are Projected to Remain Low in 5 March 5 PERSPECTIVES Key Insights Monica Defend Head of Global Asset Allocation Research Gabriele Oriolo Analyst Global Asset Allocation Research While

More information

2015 Mid-Year Market Review

2015 Mid-Year Market Review 2015 Mid-Year Market Review Cedar Hill Associates, LLC www.cedhill.com 6111 North River Road, Suite 1100, Rosemont, Illinois 60018 Phone: 312/445-2900 An Affiliate of MB Financial Bank 2015 Major Investment

More information

April 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy

April 2015. PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook & Strategy April 2015 Stocks to Stabilize & Post Gains with Further Rate Cuts & Easing Measures, ECB s QE, Gradual, Modest

More information

Statement to Parliamentary Committee

Statement to Parliamentary Committee Statement to Parliamentary Committee Opening Remarks by Mr Glenn Stevens, Governor, in testimony to the House of Representatives Standing Committee on Economics, Sydney, 14 August 2009. The Bank s Statement

More information

MACROECONOMIC OVERVIEW

MACROECONOMIC OVERVIEW MACROECONOMIC OVERVIEW MAY 20 Koç Holding CONTENTS Global Economy... 3 Global Financial Markets... 3 Global Economic Growth Forecasts... 3 Turkey Macroeconomic Indicators... Economic Growth... Industrial

More information

M&G Corporate Bond Fund

M&G Corporate Bond Fund Quarterly Review M&G Corporate Bond Fund Third quarter 2015 Fund manager Richard Woolnough Overview A general risk-off tone prevailed in the third quarter amid significant volatility in risk markets, driving

More information

percentage points to the overall CPI outcome. Goods price inflation increased to 4,6

percentage points to the overall CPI outcome. Goods price inflation increased to 4,6 South African Reserve Bank Press Statement Embargo on Delivery 28 January 2016 Statement of the Monetary Policy Committee Issued by Lesetja Kganyago, Governor of the South African Reserve Bank Since the

More information

PERSONAL RETIREMENT SAVINGS ACCOUNT INVESTMENT REPORT

PERSONAL RETIREMENT SAVINGS ACCOUNT INVESTMENT REPORT PENSIONS INVESTMENTS LIFE INSURANCE PERSONAL RETIREMENT SAVINGS ACCOUNT INVESTMENT REPORT FOR PERSONAL RETIREMENT SAVINGS ACCOUNT () PRODUCTS WITH AN ANNUAL FUND MANAGEMENT CHARGE OF 1% - JULY 201 Thank

More information

Global Investment Outlook

Global Investment Outlook PRUDENTIAL INTERNATIONAL INVESTMENTS ADVISERS, LLC. Global Investment Outlook May 2014 Stocks to Rebound with Q2 GDP & Earnings Recovery, Fresh ECB (& BoJ) Stimulus, Fed keeping U.S. Rates Low & Easing

More information

Interest Rate Insurance Prices Implicit in Option Prices

Interest Rate Insurance Prices Implicit in Option Prices Page 1 of 5 Interest Rate Insurance Prices Implicit in Option Prices June 16, 2015 (#2015-13) Douglas T. Breeden William W. Priest Professor of Finance, Fuqua School of Business, Duke University and Senior

More information

SmartRetirement Mutual Fund Commentary

SmartRetirement Mutual Fund Commentary SmartRetirement Mutual Fund Commentary J.P.Morgan Asset Management 3 rd Quarter 2014 Performance Highlights SmartRetirement s Performance Objectives The JPMorgan SmartRetirement Mutual Funds are designed

More information

2012: Deeper into crisis or the long road to recovery?

2012: Deeper into crisis or the long road to recovery? 2012: Deeper into crisis or the long road to recovery? Bart Van Craeynest Hoofdeconoom Petercam Bart.vancraeynest@petercam.be 1 2012: crises looking for answers Global slowdown No 2008-0909 rerun Crises

More information

Outlook for Economic Activity and Prices

Outlook for Economic Activity and Prices Not to be released until : p.m. Japan Standard Time on Saturday, January 3, 16. January 3, 16 Bank of Japan Outlook for Economic Activity and Prices January 16 (English translation prepared by the Bank's

More information

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group

to Wealth Management resources of one of the world s largest financial services firms. The Caribbean Group A Defined Approach to Wealth Management Giving UWI access to the combined resources of one of the world s largest financial services firms. The Caribbean Group The information in this presentation is intended

More information

No. 1 BANK OF RUSSIA FOREIGN EXCHANGE ASSET MANAGEMENT REPORT. Moscow

No. 1 BANK OF RUSSIA FOREIGN EXCHANGE ASSET MANAGEMENT REPORT. Moscow No. 1 2015 FOREIGN EXCHANGE ASSET MANAGEMENT REPORT Moscow Bank of Russia Foreign Exchange Asset Management Report No. 1 (33) 2015 Reference to the Central Bank of the Russian Federation is mandatory in

More information

The global economy Banco de Portugal Lisbon, 24 September 2013 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist

The global economy Banco de Portugal Lisbon, 24 September 2013 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist The global economy Banco de Portugal Lisbon, 24 September 213 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist Summary of presentation Global economy slowly exiting recession but

More information

FOREX WEEKLY REPORT. 22 April - 28 April 2013. Dieter Merz, Chief Investment Officer. Luciano Jannelli, Ph.D. Chief Economist

FOREX WEEKLY REPORT. 22 April - 28 April 2013. Dieter Merz, Chief Investment Officer. Luciano Jannelli, Ph.D. Chief Economist Dieter Merz, Chief Investment Officer FOREX WEEKLY REPORT Luciano Jannelli, Ph.D. Chief Economist Luc Luyet, CIIA, CMT Senior Analyst www.migbank.com DISCLAIMER & DISCLOSURES FOREX WEEKLY REPORT - An overview

More information

Bond Market Insights October 10, 2014

Bond Market Insights October 10, 2014 Bond Market Insights October 10, 2014 by John Simms, CFA and Jerry Wiesner, CFA General Bond Market Treasury yields rose in September as prices fell. Yields in the belly of the curve (5- to 7-year maturities)

More information

Staying alive: Bond strategies for a normalising world

Staying alive: Bond strategies for a normalising world Staying alive: Bond strategies for a normalising world Dr Peter Westaway Chief Economist, Europe Vanguard Asset Management November 2013 This document is directed at investment professionals and should

More information

CIO Flash U.S. Fed tapering

CIO Flash U.S. Fed tapering CIO Flash U.S. Fed tapering 19 December 2013 The art of tapering without spoiling markets (I) Final decision and first reaction Taper light, with strengthened forward guidance The Federal Open Market Committee

More information

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.

Pioneer Bond Fund. Performance Analysis & Commentary September 2015. Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments. Pioneer Bond Fund COMMENTARY Performance Analysis & Commentary September 2015 Fund Ticker Symbols: PIOBX (Class A); PICYX (Class Y) us.pioneerinvestments.com Third Quarter Review Pioneer Bond Fund s Class

More information

MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan

MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan MBA Forecast Commentary Lynn Fisher, Mike Fratantoni, Joel Kan Stronger Data Lead to Upward Revisions in Purchase Originations Forecast for 2015 and 2016 MBA Economic and Mortgage Finance Commentary: July

More information

OVERVIEW. A cyclical upswing is underway favoured by several temporary tailwinds

OVERVIEW. A cyclical upswing is underway favoured by several temporary tailwinds OVERVIEW A cyclical upswing is underway favoured by several temporary tailwinds whose strength underpins an upward revision to the growth forecast this year The outlook for economic growth in the EU has

More information

Eurozone. EY Eurozone Forecast September 2013

Eurozone. EY Eurozone Forecast September 2013 Eurozone EY Eurozone Forecast September 213 Austria Belgium Cyprus Estonia Finland France Germany Greece Ireland Italy Luxembourg Malta Netherlands Portugal Slovakia Slovenia Spain Outlook for Finland

More information

Investing Using the Business

Investing Using the Business Investing Using the Business Cycle Presented by Paul Martin M A R T I N C A P I T A L A D V I S O R S LLP A Registered Investment Advisor 100 Congress Avenue, Suite 2000, Austin, Texas 78701 3463 Magic

More information

CIO Flash Revisions to our 2016 global outlook Jan 25, 2016

CIO Flash Revisions to our 2016 global outlook Jan 25, 2016 CIO Flash Revisions to our global outlook Jan 25, +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH +++ CIO FLASH The global macro picture:

More information

Taxable Fixed Income Outlook: Waiting for Those Rising Rates

Taxable Fixed Income Outlook: Waiting for Those Rising Rates Taxable Fixed Income Outlook: Waiting for Those Rising Rates Market Commentary Fourth quarter 2014 MOST INVESTORS UNDERSTAND THAT INTEREST RATES ARE UNPREDICTABLE. But we suspect few believed rates could

More information

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia Project LINK Meeting New York, - October 1 Country Report: Australia Prepared by Peter Brain: National Institute of Economic and Industry Research, and Duncan Ironmonger: Department of Economics, University

More information

Bidding Farewell to Convergence

Bidding Farewell to Convergence Key Points Bidding Farewell to Convergence An unprecedented era of globally synchronized economic and monetary policy has driven financial markets for the last six years. The intent of this policy by central

More information

Be prepared Four in-depth scenarios for the eurozone and for Switzerland

Be prepared Four in-depth scenarios for the eurozone and for Switzerland www.pwc.ch/swissfranc Be prepared Four in-depth scenarios for the eurozone and for Introduction The Swiss economy is cooling down and we are currently experiencing unprecedented levels of uncertainty in

More information

Fixed Income Review. Second Quarter 2015

Fixed Income Review. Second Quarter 2015 Second Quarter 2015 As of June 30, 2015 Total Return Performance Calendar Year Performance Index MTD QTD YTD 2014 2013 2012 Barclays US Aggregate -1.1% -1.7% -0.1% 6.0% -2.0% 4.2% BAML US Agency Index

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

Why ECB QE is Negative for Commodities. Investment Research & Advisory. Deltec International Group

Why ECB QE is Negative for Commodities. Investment Research & Advisory. Deltec International Group Atul Lele alele@deltecinv.com +1 242 302 4135 David Munoz dmunoz@deltecinv.com +1 242 302 4106 David Frazer dfrazer@deltecinv.com +1 242 302 4156 Why ECB QE is Negative for Commodities Recent ECB Quantitative

More information

INFLATION REPORT PRESS CONFERENCE. Thursday 4 th February 2016. Opening remarks by the Governor

INFLATION REPORT PRESS CONFERENCE. Thursday 4 th February 2016. Opening remarks by the Governor INFLATION REPORT PRESS CONFERENCE Thursday 4 th February 2016 Opening remarks by the Governor Good afternoon. At its meeting yesterday, the Monetary Policy Committee (MPC) voted 9-0 to maintain Bank Rate

More information

SAGE BRIEFINGS Timely Financial Viewpoints

SAGE BRIEFINGS Timely Financial Viewpoints June 19, 2012 Investing Internationally The headline events outside of the United States, most notably those pertaining to Europe and its debt crisis, can understandably raise questions about investing

More information

96 97 98 99 00 01 02 03 04 05 06 07 08* FDI Portfolio Investment Other investment

96 97 98 99 00 01 02 03 04 05 06 07 08* FDI Portfolio Investment Other investment Chartbook Contact: Sebastian Becker +49 69 91-3664 Global Risk Analysis The unwinding of Yen carry trades Some empirical evidence 3 2 1-1 -2-3 -4 October 31, 28 Many years before the sub-prime crisis hit

More information

2012 First Quarter Equity Market Review

2012 First Quarter Equity Market Review Investment Insights 2012 First Quarter Equity Market Review By William Riegel, Head of Equity Investments After a volatile year in 2011, equity markets grew more confident in the first quarter of 2012.

More information

Markit Global Business Outlook Survey

Markit Global Business Outlook Survey News Release EMBARGOED UNTIL: 00:01 (UK), 14 July 2014 Markit Global Business Outlook Survey Worldwide business confidence wanes Global optimism slips from two-year high Waning confidence centred on eurozone

More information

Portfolio Series Portfolio Review Second Quarter 2010

Portfolio Series Portfolio Review Second Quarter 2010 Portfolio Series Portfolio Review Second Quarter 2010 We are pleased to introduce Portfolio Review, a new quarterly report on Portfolio Series. 3 Portfolio Series Income Fund 7 Portfolio Series Conservative

More information

Euro Zone s Economic Outlook and What it Means for the United States

Euro Zone s Economic Outlook and What it Means for the United States WELCOME TO THE WEBINAR WEBINAR LINK: HTTP://FRBATL.ADOBECONNECT.COM/ECONOMY/ DIAL-IN NUMBER (MUST USE FOR AUDIO): 855-377-2663 ACCESS CODE: 71032685 Euro Zone s Economic Outlook and What it Means for the

More information

Consolidated Quarterly Report of Baader Bank AG as at 31.03.2015

Consolidated Quarterly Report of Baader Bank AG as at 31.03.2015 Consolidated Quarterly Report of Baader Bank AG as at 31.03.2015 OVERVIEW OF KEY FIGURES RESULTS OF OPERATIONS Q1 2015 Q1 2014 Change in % Net interest income EUR thousand -95 869 >-100.0 Current income

More information

Insurance market outlook

Insurance market outlook Munich Re Economic Research 2 May 2013 Global economic recovery provides stimulus to the insurance industry long-term perspective positive as well Once a year, MR Economic Research produces long-term forecasts

More information

Seven-year asset class forecast returns, 2015 update

Seven-year asset class forecast returns, 2015 update Schroders Seven-year asset class forecast returns, 2015 update Craig Botham Emerging Markets Economist Introduction Our seven-year returns forecast builds on the same methodology which has been applied

More information

High Yield Bonds A Primer

High Yield Bonds A Primer High Yield Bonds A Primer With our extensive history in the Canadian credit market dating back to the Income Trust period, our portfolio managers believe that there is considerable merit in including select

More information

FOREX CURRENCY FORECAST (2015-2016)

FOREX CURRENCY FORECAST (2015-2016) 2750 14th Avenue, Suite 30 Markham Ontario, Canada, L3R 0B Fax: 1.8.20.1740 FOREX CURRENCY FORECAST (2015-201) FOREX MAJORS (USD) 2015 201 SPOT Q1a Q2f Q3f Q4f Q1f Q2f Q3f Q4f Canadian Dollar USD/CAD 1.27

More information

Bond Outlook. Third Quarter 2014. Waiting on the Fed. 10-Year Treasury Yields. Treasury Bonds. Break-even Inflation Rate

Bond Outlook. Third Quarter 2014. Waiting on the Fed. 10-Year Treasury Yields. Treasury Bonds. Break-even Inflation Rate Third Quarter 21 Waiting on the Fed Despite a strong rebound in domestic economic activity with gross domestic production accelerating toward %, persistent low inflationary pressures and dramatically lower

More information

Investment Strategies for Pension Funds. Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK)

Investment Strategies for Pension Funds. Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK) Investment Strategies for Pension Funds Christopher Nichols Investment Director, Multi Asset Investing Standard Life Investments (UK) Pensions need consistency but markets deliver chaos Discrete Yearly

More information

Why Are Government Bond Yields Still Low, and Are They Going up Any Time Soon?

Why Are Government Bond Yields Still Low, and Are They Going up Any Time Soon? September 015 MONTHLY MARKET INSIGHT Why Are Government Bond Yields Still Low, and Are They Going up Any Time Soon? The fear of rising interest rates, which has clouded investors psyches for years, has

More information

The Fix Fixed income flashback: is history going to repeat?

The Fix Fixed income flashback: is history going to repeat? December 2014 For professional investors only The Fix Fixed income flashback: is history going to repeat? Kellie Wood, Portfolio Manager, Fixed Income Traditional financial theory portends that bond prices

More information

DEUTSCHE ASSET & WEALTH MANAGEMENT REAL ESTATE OUTLOOK

DEUTSCHE ASSET & WEALTH MANAGEMENT REAL ESTATE OUTLOOK Research Report DEUTSCHE ASSET & WEALTH MANAGEMENT REAL ESTATE OUTLOOK Second Quarter 2013 Economic Outlook Business and consumer spending to drive recovery Quantitative easing beginning its expected unwinding

More information

Thinking tactically: What really happens next?

Thinking tactically: What really happens next? Thinking tactically: What really happens next? Guy Monson March 2015 Since 2008, Central bank asset purchases have successfully protected markets from an array of global risks... A SHARP INCREASE IN CENTRAL

More information

A Strong U.S. Dollar Changes Everything

A Strong U.S. Dollar Changes Everything Schwab Center for Financial Research A Strong U.S. Dollar Changes Everything A white paper by Kathy A. Jones, Senior Vice President, Chief Fixed Income Strategist The U.S. dollar is near its highest level

More information

A Checklist for a Bond Market Sell-off

A Checklist for a Bond Market Sell-off A Checklist for a Bond Market Sell-off New Zealand Fixed Income Monthly Commentary February 2013 Christian@harbourasset.co.nz +64 4 460 8309 Just like 2011 and 2012, the start of a new year has again prompted

More information

Credit Suisse Asset Management Headline Ideas 2015 Dividends An Important Source of Income When Interest Rates Are Low. For qualified investors only

Credit Suisse Asset Management Headline Ideas 2015 Dividends An Important Source of Income When Interest Rates Are Low. For qualified investors only Credit Suisse Asset Headline Ideas 2015 Dividends An Important Source of Income When Interest Rates Are Low For qualified investors only Dividends An Important Source of Income When Interest Rates Are

More information

Absolute return strategies offer modern diversification

Absolute return strategies offer modern diversification February 2015» White paper Absolute return strategies offer modern diversification Key takeaways Absolute return differs from traditional stock and bond investing. Absolute return seeks to reduce market

More information

TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS. Developed by Peter Dag & Associates, Inc.

TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS. Developed by Peter Dag & Associates, Inc. TIMING YOUR INVESTMENT STRATEGIES USING BUSINESS CYCLES AND STOCK SECTORS Developed by Peter Dag & Associates, Inc. 5 4 6 7 3 8 3 1 2 Fig. 1 Introduction The business cycle goes through 4 major growth

More information

Bond Fund Investing in a Rising Rate Environment

Bond Fund Investing in a Rising Rate Environment MUTUAL FUND RESEARCH Danette Szakaly Ext. 71937 Date Issued: 1/14/11 Fund Investing in a Rising Rate Environment The recent rise in U.S. Treasury bond yields has some investors wondering how to manage

More information

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Currency-hedged exchange-traded funds (ETFs) may offer investors a compelling way to more precisely access

More information

Meeting with Analysts

Meeting with Analysts CNB s New Forecast (Inflation Report II/2015) Meeting with Analysts Petr Král Prague, 11 May, 2015 1 Outline Assumptions of the forecast The new macroeconomic forecast Comparison with the previous forecast

More information

Better domestic economy but lower rates

Better domestic economy but lower rates ZACH PANDL, PORTFOLIO MANAGER AND STRATEGIST 215 PERSPECTIVES INTEREST RATES: FAREWELL, LIQUIDITY TRAP With continued growth and further improvement in labor markets, the Federal Reserve (the Fed) looks

More information

KDP ASSET MANAGEMENT, INC.

KDP ASSET MANAGEMENT, INC. ASSET MANAGEMENT, INC. High Yield Bond and Senior Secured Bank Loan Outlook October 2015 Asset Management, Inc. 24 Elm Street Montpelier, Vermont 802.223.0440 HighYield@kdpam.com This is an analytical

More information

EFN REPORT. ECONOMIC OUTLOOK FOR THE EURO AREA IN 2013 and 2014

EFN REPORT. ECONOMIC OUTLOOK FOR THE EURO AREA IN 2013 and 2014 EFN REPORT ECONOMIC OUTLOOK FOR THE EURO AREA IN 2013 and 2014 Summer 2013 1 About the European Forecasting Network The European Forecasting Network (EFN) is a research group of European institutions,

More information

Guiding successful Texas families in their asset management since 1982

Guiding successful Texas families in their asset management since 1982 OCTOBER 2014 FOURTH QUARTER OUTLOOK Especially compiled and written for clients of Woodway Financial Advisors Guiding successful Texas families in their asset management since 1982 Third Quarter Market

More information

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK 1 FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK By Michael McMurray, CFA Senior Consultant As all investors are aware, fixed income yields and overall returns generally have been

More information

Monetary Policy Matters

Monetary Policy Matters Monetary Policy Matters February 26, 2015 by Mark Mobius of Franklin Templeton Investments This year we expect the divergence in monetary policy among the world s central banks to be a key theme and a

More information

March 2015. Investment policy. CH, DE, AT, IT, FR, FL and LU edition

March 2015. Investment policy. CH, DE, AT, IT, FR, FL and LU edition March 2015 Investment policy CH, DE, AT, IT, FR, FL and LU edition Further expansion of the equity exposure in Europe and the emerging countries. The Swisscanto equities barometer 0 neutral allocation

More information

EUROSYSTEM STAFF MACROECONOMIC PROJECTIONS FOR THE EURO AREA

EUROSYSTEM STAFF MACROECONOMIC PROJECTIONS FOR THE EURO AREA EUROSYSTEM STAFF MACROECONOMIC PROJECTIONS FOR THE EURO AREA On the basis of the information available up to 22 May 2009, Eurosystem staff have prepared projections for macroeconomic developments in the

More information

Recent Developments in Economic Activity, Prices, and Monetary Policy

Recent Developments in Economic Activity, Prices, and Monetary Policy June 23, 2016 Bank of Japan Recent Developments in Economic Activity, Prices, and Monetary Policy Speech at a Meeting with Business Leaders in Ishikawa Takahide Kiuchi Member of the Policy Board (English

More information

Research. What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields?

Research. What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields? Research What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields? The global economy appears to be on the road to recovery and the risk of a double dip recession is receding.

More information

Global Agg REITS MSCI EM MSCI EM 35.8% REITS 34.4% 33.6% 4.8% Small cap. Comdty. Comdty MSCI EM -35.6% 28.8% 16.2% Growth 10.5% REITS. Value.

Global Agg REITS MSCI EM MSCI EM 35.8% REITS 34.4% 33.6% 4.8% Small cap. Comdty. Comdty MSCI EM -35.6% 28.8% 16.2% Growth 10.5% REITS. Value. Market Review November 2015 Review of markets over October October was the month that equities came back. Stock exchanges across the globe had a great month, rebounding from the late summer drawdowns,

More information

Heritage Wealth Advisors Asset Class Research: International Equity Investing Revisited July 27, 2012

Heritage Wealth Advisors Asset Class Research: International Equity Investing Revisited July 27, 2012 July 27, 2012 Since the 2008 09 Global Financial Crisis, we have been faced with many challenges in investing where some of the old rules and ideas have been questioned. Such challenges are a healthy part

More information

ARC Assigns BBB Rating to Italy

ARC Assigns BBB Rating to Italy ARC Assigns BBB Rating to Italy ISSUER RATINGS DATE Republic of Italy August 28, 2015 ISSUER RATINGS - FOREIGN CURRENCY Medium and Long Term BBB (BBB, Stable) ISSUER RATINGS - LOCAL CURRENCY Medium and

More information

Mawer Canadian Bond Fund. Interim Management Report of Fund Performance

Mawer Canadian Bond Fund. Interim Management Report of Fund Performance Interim Management Report of Fund Performance For the Period Ended June 30, 2015 This interim management report of fund performance contains financial highlights but does not contain either interim or

More information

BERYL Credit Pulse on High Yield Corporates

BERYL Credit Pulse on High Yield Corporates BERYL Credit Pulse on High Yield Corporates This paper will summarize Beryl Consulting 2010 outlook and hedge fund portfolio construction for the high yield corporate sector in light of the events of the

More information

Growth and volatility will define global economy in 2016, says PineBridge Investments

Growth and volatility will define global economy in 2016, says PineBridge Investments Growth and volatility will define global economy in 2016, says PineBridge Investments PineBridge Investments forecasts 2.7% GDP growth in the United States Eurozone growth projected to slightly improve

More information

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Currency-hedged exchange-traded funds (ETFs) offer investors a compelling way to access international-equity

More information

Greece Current trajectory & macroeconomic outlook

Greece Current trajectory & macroeconomic outlook Greece Current trajectory & macroeconomic outlook 2 η Διημερίδα Επίκαιρα Ζητήματα Φορολογικού Δικαίου 12-13 Δεκεμβρίου 2015 e-θέμις Dr. Platon Monokroussos Group Chief Economist Eurobank Ergasias S.A.

More information

MAPFRE in 2014. Antonio Huertas. Presentation of Annual Results February 11, 2015. MAPFRE Chairman & CEO

MAPFRE in 2014. Antonio Huertas. Presentation of Annual Results February 11, 2015. MAPFRE Chairman & CEO MAPFRE in 2014 Presentation of Annual Results February 11, 2015 Antonio Huertas MAPFRE Chairman & CEO 2014 Results MAPFRE's results are excellent: 845 million euros in profits 2013 2014 % Consolidated

More information

The U.S. Outlook and Monetary Policy. Esther L. George President and Chief Executive Officer Federal Reserve Bank of Kansas City

The U.S. Outlook and Monetary Policy. Esther L. George President and Chief Executive Officer Federal Reserve Bank of Kansas City The U.S. Outlook and Monetary Policy Esther L. George President and Chief Executive Officer Federal Reserve Bank of Kansas City February 2, 2016 Central Exchange Kansas City, Mo. The views expressed by

More information

Economy, Capital Markets & Strategy

Economy, Capital Markets & Strategy Sébastien Mc Mahon, CFA Economist Member, Asset Mix Committee Economy, Capital Markets & Strategy 2014 National Business Conference October 2014 1 October 23, 2014 Disclaimer Opinions expressed in this

More information

HANSA TRUST Annual General Meeting 21 st July 2014

HANSA TRUST Annual General Meeting 21 st July 2014 Annual General Meeting 21 st July 2014 Agenda Transition update/ New funds bought Performance review Market outlook 2 Transition Update/ New Funds Bought 3 Performance Review 4 Key Market Highlights (YTD

More information

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010

MLC Investment Management. Constructing Fixed Income Portfolios in a Low Interest Rate Environment. August 2010 Constructing Fixed Income Portfolios in a Low Interest Rate Environment August 2010 Stuart Piper Portfolio Manager MLC Investment Management For Adviser Use Only 1 Important Information: This Information

More information

CANADA AND U.S. AUTO SALES: ROOM FOR FUR- THER GROWTH? October 2014. Factors supporting the U.S. sales outlook: Employment Growth

CANADA AND U.S. AUTO SALES: ROOM FOR FUR- THER GROWTH? October 2014. Factors supporting the U.S. sales outlook: Employment Growth 93619 CANADA AND U.S. AUTO SALES: ROOM FOR FUR- THER GROWTH? October 2014 Canadian and U.S. auto sales have strengthened significantly from recession lows. Canadian new motor vehicle sales have surprised

More information

Private Banking Global Wrap Up Bank of Ireland Private Banking

Private Banking Global Wrap Up Bank of Ireland Private Banking Private Banking Global Wrap Up Bank of Ireland Private Banking 2 nd Quarter 2015 Investor Overview Developed Economies improve but markets ease back in Q2 Last quarter we highlighted a number of factors

More information

Mackenzie Private Wealth Counsel

Mackenzie Private Wealth Counsel Mackenzie Private Wealth Counsel Q1 216 Review Opportunities in a Challenging Macro Environment Todd Mattina, Chief Economist and Strategist, Mackenzie Asset Allocation Team Following one of the rockiest

More information

2015 2 nd Quarter Market Commentary

2015 2 nd Quarter Market Commentary 2015 2 nd Quarter Market Commentary 1 Second Quarter Summary The U.S. Federal Reserve communicated that recent economic growth means the era of easy money may soon come to a close, causing bond yields

More information

Elite LJ Active Portfolio Fund

Elite LJ Active Portfolio Fund Elite LJ Active Portfolio Fund Short Report for the year ended 30 April 2015 Investment Objective and Policy The objective of the Fund is to achieve a total positive return in all market conditions, over

More information

BANK OF ISRAEL Office of the Spokesperson and Economic Information. Report to the public on the Bank of Israel s discussions prior to deciding on the

BANK OF ISRAEL Office of the Spokesperson and Economic Information. Report to the public on the Bank of Israel s discussions prior to deciding on the BANK OF ISRAEL Office of the Spokesperson and Economic Information September 7, 2015 Report to the public on the Bank of Israel s discussions prior to deciding on the General interest rate for September

More information

UK Economic Forecast Q3 2014

UK Economic Forecast Q3 2014 UK Economic Forecast Q3 2014 David Kern, Chief Economist at the BCC The main purpose of the BCC Economic Forecast is to articulate a BCC view on economic topics that are relevant to our members, and to

More information

Economic Snapshot January 2013

Economic Snapshot January 2013 January 2013 In summary January saw 2013 begin on a good note with strong gains on local markets. In percentage terms the Australian share market rose approximately 5%. This means the market has risen

More information