Equity Market Distortions Create Big Payback Potential
Joseph G. Paul (pictured) and Kevin Simms Even after this year’s equities rally, market imbalances created by the financial crisis in 2008 have not disappeared. When these distortions unwind, we expect deep value stocks to rapidly recover.
read moreCracks Appear in the French Economic Model
Today’s PMI data point to a deepening recession in France at a time when Germany is showing tentative signs of life. Is the euro crisis exposing the weaknesses of the French economic model?
read moreEquities Set to Break Out of the Bear Trap
In the face of significant uncertainties, US and global equities rallied in 2012 and at the start of the New Year. We think there might be more to come as stocks break out of the bear trap.
read moreEuro-Area Periphery Faces More Pain to Complete Rebalancing
Most peripheral euro-area countries have significantly improved their competitiveness recently, but more needs to be done. With currency devaluation ruled out, further downward pressure on labor costs is likely, which will probably deepen and prolong recessions and interfere with fiscal adjustment.
read moreGreece Still Needs a Long-Term Growth Plan
Even by the standards of the sovereign-debt crisis, the provisional agreement reached yesterday by euro-area finance ministers and the International Monetary Fund (IMF) on a second Greek rescue package looks like a messy fudge. It is clear that Greece’s euro-area partners are determined to avoid a near-term euro-area exit, but a long-term solution will require [...]
read morePrivate Sector Involvement Is Unlikely in Second Portuguese Bailout
With 10-year Portuguese bond yields above 14% (see Display), the market is suggesting that Portugal will soon need another bailout from its euro-area partners. While we share the market’s skepticism about the sustainability of Portugal’s public sector finances, we doubt that policymakers at this stage will seek to impose losses on private sector creditors, as [...]
read moreThe Power of Diversifying by Investment Time Horizon
No portfolio is protective in all environments, but the best risk-management strategy is to maintain exposure to well-chosen investments and strategies with short, intermediate and long time horizons. Each group will be poised to outperform in different markets and in response to different investor moods.
read moreEurope’s Fiscal Compact: A Very Modest Step Forward
The fiscal compact that the leaders of most European Union countries agreed on last week to bring some order to the euro area was broadly in line with expectations. While it may eventually be seen as a first step towards true fiscal union, it is more like a pistol than the long-awaited big bazooka.
read moreIs the Euro Zone at the Beginning of the End of Muddling Through?
This week’s series of high-level meetings in Europe is being billed as make or break for the euro. The good news is that European politicians finally seem to realize the extreme seriousness of the current situation. But any agreement at this Friday’s summit of all 27 euro-area countries is likely to stop short of anything [...]
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