Global Investment Outlook – April 2016 Research
Savvy Investor is a free resource hub and research library for institutional investors around the world. We curate the best investment papers, and make them available to our members. Here are a few of the top papers on the investment outlook as of April 2016.
JP Morgan Guide to the Markets (Q2 2016)
This excellent 70 page chart-book from JP Morgan is packed with tables and graphs showing economic indicators, growth and inflation dynamics and metrics for global asset classes. This is the latest in a regular series of quarterly reports.
Investment Outlook from Bill Gross (Janus Capital, Apr 2016)
Janus Capital's Bill Gross shares his thoughts on the impact of negative interest rates on investors' stock selection options.
Can Liquidity Explain the Recent Fall in Breakeven Inflation? (PIMCO)
Implied expectations for US inflation can be drawn from the difference between the yield on government bonds and the yield on inflation-protected securities (TIPS). In recent months this "breakeven" rate has steadily declined, raising significant questions for investors and the Fed.
Equities - the "new safe option" for portfolios? (Allianz)
According to the authors, not taking risks at all is the biggest risk. They argue that in these times of financial repression, equities are even more “secure” than bonds. The authors examine the long run behavior of equities and draw salient conclusions.
The Stock Market as Monetary Policy Junkie: Quantifying the Impact of the Fed on S&P 500 (James Montier, GMO)
One of the stated goals of the Fed since the Financial Crisis is to raise asset prices; this has been standard operating procedure since Greenspan’s tenure began. However, the transmission mechanism doesn’t appear to be lower rates. Rather, it seems to come from the influence that the FOMC announcements have on the market’s “animal spirits.”
Low global inflation expectations: This is getting serious (CBA)
Consumers’ inflation expectations have decreased to low levels in many economies. Even Yellen is concerned; Low inflation expectations may be contributing to weak wages growth even in economies with little labour market slack such as the US, the UK and Japan.
CPI of the beholder: Is global inflation overstated? (LGIM, April 2016)
In light of rapid technological development, it is plausible that inflation across the globe has been materially overstated (whilst volume growth is understated). This has significant consequences for financial markets: solving both the 'productivity puzzle' and the ‘bond yield conundrum’, whilst also explaining ultra-loose monetary policy as we continue into our seventh year of global recovery.
Brexit: Why Leaving The EU Will Be Costly For The UK And Sterling Assets (Aviva)
The UK’s momentous referendum on whether or not to remain in the European Union (EU) is yet to reach an outcome. We have confidence in our belief that the UK economy and financial asset prices would suffer if the country decided to opt to leave the EU.
The Investment Implications of an Aging World (PGIM, 2016)
This paper examines aging populations, now a worldwide phenomenon, and seeks to identify investment strategy ideas that can be implemented by institutional investors. By 2040, the number of those aged 65+ double from what it is today to reach 1.3 billion. And it's not just a Developed World problem - two-thirds of the world's seniors live in Emerging Markets. The current aging trends will have profound implications for individuals, business and governments.
How volatility extremes are skewing returns (Hermes, Mar 2016)
As investors look back through the ruins of early 2016, one thing is apparent: volatility is back. This paper has been authored by Eoin Murray, Head of the Investment Office, and Ian Johnson, Performance Analyst.
The end of negative rates, but not central bank alchemy (Gavyn Davies)
Recent moves into negative interest rate territory by the BoJ, ECB and other European central banks have stirred debate among investors and raised questions as to whether central banks are "out of ammunition". In this paper, Gavyn Davies of Fulcrum Asset Management argues that the markets have taken the view (rightly) that negative policy rates will damage the profitability of the financial sector, despite central bank efforts to alleviate these effects.
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Asset Management Salaries – new survey results 2015-2016
Our most popular papers – salary surveys from around the world, showing benchmark remuneration for a variety of roles within the asset management industry, at different levels of seniority.
Expected Future Asset Class Returns for 2016-2020 (Robeco)
In this first-rate 120 page document, Robeco present their predictions for expected returns for major asset classes during 2016-2020, before outlining the insight and assumptions underlying these forecasts.
2016 Investment Outlook - Cycles Out of Sync (BlackRock)
This paper is now a few months old, but the analysis remains pertinent. For years now, financial markets have been dominated by the monetary policy cycle. As global liquidity reaches its peak, the credit, business and valuation cycles should grow in importance. Peculiarly, these cycles appear to be out of step with each other, making the case for careful navigation over the next 12 months.
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