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Strategy for a minefield and a public goodbye

Genevieve Signoret

Letter from the President With the Fed preparing to hike in the next six months, we have reached that stage in which the market starts turning into a minefield: U.S. Treasury bond prices now show serious downward momentum, and we expect stock and exchange rate volatility to start to move up. I reiterate my view […]

Two additional strategy changes

Genevieve Signoret

Letter from the President Last week I announced here a strategy change: we’re replacing small for large cap stocks in our short-term model portfolio. Today I announce two additional strategy changes: For clients investing in pesos, we’re focusing transitory buckets on Swiss and Asia ex-Japan equity, ridding them of Mexico and UK stocks. We’re buying small cap […]

Watching the data with Yellen

Genevieve Signoret

Letter from the President Market outlook We’re all watching the data with Janet Yellen. Headline inflation is zero and core inflation has weakened. While jobs are more plentiful, underemployment remains vast. U.S. demand had been gathering strength, but, in February, manufacturing weakened. Greece is almost out of cash, and no deal is visible on the […]

FOMC minutes confirm my view

Genevieve Signoret

Letter from the President In the minutes for the FOMC meeting of January 27-28, we read evidence that FOMC discussions are moving in the direction of postponing the start of interest rates normalization to beyond June 2015. In previous minutes, members had seemed to discount the importance of the recent sharp drop in inflation compensation […]

Will Yellen testimony Tuesday 24 confirm our reading of the minutes?

Genevieve Signoret

Macro Views Next week in brief Janet Yellen’s starts her testimony before Congress on Tuesday 24 and finishes Wednesday 25. Her words have huge potential to move markets. Our reading of minutes of the January 27–28 FOMC meeting released last week is that the FOMC’s faith in its own previous forecast that it will hike […]

Revised portfolio strategies

Genevieve Signoret

Letter from the President We built a new short-term model portfolio[1] to brace for the Fed rate hikes we expect next summer and adjusted our medium-term and long-term portfolios to reflect changes in our equity outlook: our view on U.S. energy stocks has darkened—we no longer can come up with a basis for anticipating a […]

Major changes in our fixed income strategies

Genevieve Signoret

Fixed Income We continue to expect the first Fed rate hike in the third quarter of 2015 and see a risk that it will come sooner. Given our view on rates, we think the U.S. yield curve is unsustainably flat and will adjust abruptly (painfully) quite soon. We see its flatness as a flight to […]

2015–2016 Outlook: Low for Long

Genevieve Signoret

Letter from the President We’ve updated our Quarterly Outlook for the global economy and asset markets, which now goes through the fourth quarter of 2016. You can consult full forecast tables here and scenario assumptions here. In coming days we’ll publish the full report. Meanwhile, we leave you with this summary. Our central scenario is […]

Will the ECB start to buy sovereign bonds?

Genevieve Signoret

Macro Views Outlook We anticipate the ECB to announce on Thursday that it will extend its asset purchase program to include sovereign bonds. Please see today’s Letter from the President for a summary of our outlook for 2015-2016. Also check out our new forecast tables and scenario assumptions. Activity December retail sales surprised to the […]

Still bullish on equity, happy with 7–10-year bonds

Genevieve Signoret

Letter from the President Notwithstanding the collapse in oil prices, we hold to our view that interest rates globally will remain low for long. This view is driving our portfolio strategies, so they remain unchanged also: we remain comfortable in our 7–10-year position on the U.S. investment grade yield curve and bullish on equity. We’re […]