MARKET COMMENTARY | September 2015 | FEATURING Timothy D. Armour & Rob Lovelace
Global stocks have tumbled in recent days amid investor concerns about slowing economic growth in China. A sharp decline in Chinese stocks and a surprise currency devaluation have further stoked fears that the outlook for China is deteriorating, and events there could hurt its global trading partners, including Japan, Europe and ultimately the United States. China lowered interest rates and eased reserve requirements on banks in an attempt to calm investors and stimulate the economy. Against this backdrop, portfolio managers Tim Armour and Rob Lovelace share their thoughts on the unfolding events:
MARKET COMMENTARY | August 2015
Global stocks advanced amid improving economic data in the United States and an easing of the Greek debt crisis. Defensive sectors led markets higher as consumer staples, health care and utilities stocks rallied. Emerging markets stocks declined, weighed down by a sharp drop in Chinese shares and falling commodities prices. High-grade bonds gained from a flight-to-safety trade. The U.S. dollar rose against the euro, the yen and most other currencies.
INVESTMENT INSIGHTS | August 2015 | FEATURING Shaw B. Wagener
Urbanization is nothing new. It’s been going on for centuries, and it helped make Europe and the United States global economic and political powers. But what is different about today’s wave of urbanization is its unprecedented speed and scale — it’s bigger and faster than ever.
INVESTMENT INSIGHTS | August 2015 | FEATURING Joanna F. Jonsson
Per Capita GDP Has Risen in Tandem With Increases in the Urbanization Rate
Urbanization isn’t a modern phenomenon. In centuries gone by, the shift to living in cities underpinned the industrial revolutions of Europe and the United States and the rise of those regions to global economic and political power.
INVESTMENT INSIGHTS | August 2015 | FEATURING Joanna F. Jonsson
2014 Was the “Tallest Year Ever,” With the Completion of a Record 97 Buildings Above 200 Meters
Elisha Otis founded The Otis Elevator Company in 1853, but it was the company’s 1903 innovation called the gearless traction elevator that set in motion a remarkable change in the urban landscape.
INVESTMENT INSIGHTS | August 2015 | FEATURING Andrew H. Dougherty
Global Investment (Trillions), 2013–2030
Some countries need infrastructure that simply meets basic human needs, such as safe drinking water. Another may want to modernize its transportation network, and still others may be trying to lay the groundwork for future global competitiveness by building a national broadband network.
INVESTMENT INSIGHTS | August 2015 | FEATURING Todd M. Saligman
Airport Construction Projects Worldwide and Investment Amount (in Billions)*
China started working on a new airport near Beijing on December 26, 2014. The airport, which is being designed by Netherlands Airport Consultants, is expected to be completed in 2018 and cost about
$14 billion. Upon completion, the 7.5 million square foot terminal will accommodate about 45 million people per year.
INVESTMENT INSIGHTS | August 2015 | FEATURING Gregg E. Ireland
Africa provides one of the classic examples of technology trumping traditional infrastructure. The introduction of mobile phones has allowed millions of Africans to receive the social and economic benefits of telephone networks without the sunk cost of massive landline infrastructure.
MARKET COMMENTARY | July 2015
Global stocks produced mixed returns as signs of improving economic growth were offset by fears of rising interest rates and a worsening debt crisis in Greece. Telecommunications stocks proved to be a bright spot, driven higher by M&A activity, while the rate-sensitive utilities sector fell the most. Emerging markets stocks advanced, supported by monetary easing in China. Bonds declined and the dollar slipped 4% against the euro.
INVESTMENT INSIGHTS | Mon Jun 01 13:38:00 PDT 2015
The situation in Greece remains very fluid. Unwilling to implement certain proposed austerity measures, the Greek government has rejected the proposal for an extension of the financial bailout package by its official creditors. That said, it is not a foregone conclusion that this will lead to a significant debt default or Greece’s exit from the eurozone.
Nevertheless, the possibility of both events has increased, leading to greater caution among investors and a flight to safer, more liquid financial assets. The next week is an important one and we will continue to monitor events closely. According to media reports, a last-ditch effort to broker a deal between the Greek government and its creditors may be underway.
MARKET COMMENTARY | June 2015
Global stocks managed a slight gain as investors reacted to mixed reports about the pace of worldwide economic growth. Technology and health care stocks rallied, while the energy sector continued to feel the impact of volatile oil prices on corporate earnings. Japanese stocks advanced on improving economic data. Emerging markets declined amid fears of higher U.S. interest rates. Bonds declined and the dollar rose against the euro and the yen.
INVESTMENT INSIGHTS | May 2015 | FEATURING Johnny Chan
Mobile payments see growing acceptance as volumes surge
Cash or check? How about smartphone. In 2014, customers in U.S. retail stores made an estimated $5.5 billion in purchases using a mobile device. That’s only about 0.1% of the nation’s sales. In 2019, however, shoppers are expected to spend an estimated $819 billion using a mobile device, or about 15% of sales, according to researchers at BI Intelligence.
INVESTMENT INSIGHTS | May 2015 | FEATURING David Carpenter
Music Downloads Top the Charts
Yes, sales of vinyl records are surging — nearly 10 million old-fashioned platters were sold in 2013, the most since 1997. Who’s buying records? Mostly hipsters into indie-rock, and diehard audiophiles who contend vinyl recordings sound better than digital (among recent bestsellers on vinyl: Jack White’s Lazaretto and Beck’s Morning Phase). While it’s nice for old times’ sake to see vinyl win a battle, the war over how we listen to music may be over, and if digital hasn’t already won, the others may be down for the count.
INVESTMENT INSIGHTS | May 2015 | FEATURING Mark Denning
American Funds Investment Results
INVESTMENT INSIGHTS | May 2015 | FEATURING Jonathan Knowles
Revenue from the cloud came fast for AWS
First off, all of your music and pictures aren’t really up in the air. The cloud is a cool name, but the reality of data storage and computing is more akin to a farm than the sky.
INVESTMENT INSIGHTS | May 2015 | FEATURING Rich Wolf
Renewed focus on research and technology boosts biopharma revenue growth
Cancer has a cloaking mechanism that’s so efficient the immune system can’t see the disease. That cloak of invisibility, however, may soon be pulled away thanks to revolutionary new approaches in immuno-oncology, which harnesses the patient’s own immune system to recognize and fight cancer.
INVESTMENT INSIGHTS | May 2015 | FEATURING Nick Grace
Sampling of companies that have entered and exited the S&P 500 Index, 1979–2015
MARKET COMMENTARY | May 2015
Global stocks rose modestly amid a strong rally in the energy sector. Rising oil prices, surging M&A activity and central bank stimulus measures helped to support world stock prices despite a slowdown in U.S. economic growth during the first quarter. Emerging markets rallied as market observers pushed back the timing of an increase in interest rates by the Federal Reserve to later in the year. Bond markets declined and the dollar lost ground against the euro, the pound and most other currencies.
INVESTMENT INSIGHTS | April 2015 | FEATURING Rob Lovelace
Many Currencies Face Dollar Strength and Higher Volatility
INVESTMENT INSIGHTS | March 2015
Moving Up the S-Curve
INVESTMENT INSIGHTS | Thu Feb 05 17:24:39 PST 2015
It Isn’t Just Shale: Oil Production Growth Is a Global Phenomenon
In 2014, oil prices posted their largest annual decline since the global financial crisis, losing more than 45% as weaker demand and strong global crude output created a supply glut. The collapse saw prices at a five–year low, battering energy shares — which finished 2014 nearly 13% lower — and weighing heavily on financial markets in oil–exporting countries. In our view:
INVESTMENT INSIGHTS | January 2015 | FEATURING Frank C. Hu
Oil Companies Have Been a Healthy Source of Dividends Globally
Over the last few years, large oil and gas companies have been among the biggest payers of dividends. Clearly the decline in oil prices is concerning because in most cases, it means that dividends cannot be fully funded from free cash flow. But I believe that, for the large integrated oil companies, the oil price would have to fall a lot further to call into question their ability to pay and increase their dividends.
INVESTMENT INSIGHTS | January 2015 | FEATURING Rob Lovelace
INVESTMENT INSIGHTS | April 2014 | FEATURING Rob Lovelace
There are periods of fundamental change that can transform the way we live and work. The Industrial Revolution, of course, changed everything from agriculture to the social structure, effectively ending the way mankind had functioned for thousands of years.
Today it seems as if we are in the middle of another revolution, and clearly these changes pose significant challenges and opportunities for long-term investors.
INVESTMENT INSIGHTS | April 2014 | FEATURING Brad Barrett
MARKET COMMENTARY | Fri Mar 07 12:59:19 PST 2014
INVESTMENT INSIGHTS | February 2014 | FEATURING Eu-Gene Cheah
The 39 New Drugs Approved in 2012 Represented the Most Approved in More Than a Decade
INVESTMENT INSIGHTS | February 2014
Rising incomes have introduced emerging markets consumers to a wide variety of luxuries common in the developed world, from better education and health care to smart phones and luxury automobiles. But developing nations have also increasingly adopted Western lifestyles and diets, predisposing large portions of their population to a serious epidemic: Type 2 diabetes.
INVESTMENT INSIGHTS | February 2014 | FEATURING Claudia P. Huntington
Look Beyond Europe-Domiciled Companies
INVESTMENT INSIGHTS | February 2014 | FEATURING Steve T. Watson & Claudia P. Huntington
Balancing Act: The Engines of the Global Economy May Be in the Process of Trading Places
Maybe the developed world isn’t quite ready to be put out to pasture after all. Suddenly, the United States seems to be feeling spry, Japan is shaking off the doldrums and Europe has a little bit of spring in its step.
Indeed, there are signs of stability and strength on a variety of fronts for all three of the old-school engines of the global economy. The advances may be gradual and fitful, but they are nonetheless reassuring evidence of the adaptability and vitality of the world’s largest developed economies.
INVESTMENT INSIGHTS | February 2014 | FEATURING Mark Denning
Over the past 40 years, the global economy has become increasingly interdependent. Free trade agreements, the European Union, economic reforms and the rise of a middle class in developing economies has allowed companies to compete for customers, labor, capital and natural resources on a global basis.
MARKET COMMENTARY | January 2014
Stocks ended the year with strong gains in developed economies, reaching historic highs in several key markets. Central bank stimulus, an accelerating U.S. economy, and improved corporate earnings supported higher valuations in the U.S, Europe and much of Asia. Emerging markets trailed developed markets, hampered by concerns about U.S. monetary policy. Information technology stocks rallied around the world, while rising interest rates weighed on the utilities sector. U.S. Treasury bonds declined as rates reached a high point for the year and investors moved out of safe-haven assets. The dollar fell 2% against the euro but rallied 7% versus the yen.
MARKET COMMENTARY | January 2014
Stocks enjoyed a strong rally in developed markets, supported by central bank stimulus, improving economic activity and reasonably good earnings growth. Emerging markets equities and most fixed-income markets declined as the U.S. Federal Reserve contemplated and later implemented a reduction in its massive bond-buying programs known as quantitative easing. The Fed action drove interest rates higher, pressuring bond markets and reducing demand for higher risk assets. Gold and silver prices plummeted as concerns about inflation waned.
Most sectors enjoyed double-digit gains for the year, led by consumer discretionary and health care stocks. Telecommunication services stocks advanced amid resurgent M&A activity. Corporate bond issuance soared as companies sought to lock in low borrowing costs. The year closed on a positive note as several key stock market indices reached all-time highs in December. U.S. equities rose 32%, the largest gain since 1997.
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