A portfolio manager discusses his investment strategy in light of headwinds from Europe, China and the oil markets that pose a threat to the momentum of U.S. investing.
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.
An investment analyst discusses the great strides seen in health care innovation and outcomes in recent years, but wonders whether the U.S. economy can support the proliferation of new drugs soon to be on the market.
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.
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.
A portfolio manager discusses the U.S.’s return to world economic dominance, the positive implications of a rise in interest rates, how he sees today’s market volatility as a plus, the importance of maintaining equity exposure outside the U.S. and the potential benefits of opening a 529 college savings plan.
A China affairs specialist details China’s urbanization plan and explains the nation’s property market problems — resulting in cities filled with empty buildings — as a matter of supply and demand.
A China affairs specialist details five key points that are commonly misunderstood about China, including its business cycles; its headwinds; and the importance of property, policy and politics.
An economist maintains that the best investment opportunities in Europe are companies that can benefit from the structural changes taking place in the region.
An economist looks at today’s U.S. equity valuations in light of low current interest rates and an accelerating economy, and concludes that earnings — and by extension, returns — will continue to rise.
An economist anticipates a gradual rise in U.S. interest rates over the next year or two, given the Fed’s policy of tapering off its purchases of Treasury and mortgage securities. However, low inflation should keep rising rates in check.
MARKET COMMENTARY | April 2014 | FEATURING Darrell Spence
Faster GDP Growth Should Lead to Stronger EPS Growth
Despite recent signs of a slowdown in activity, the U.S. economy remains in expansion mode and growth is likely to accelerate in the months ahead, says Capital Group economist Darrell Spence. Severe weather has clearly had an impact in recent months. However, taking a step back and looking at the big picture, the U.S. economic recovery remains on track, thanks to pent-up housing demand, accommodative monetary policy, improving fiscal conditions at state and local governments, a significant federal budget compromise, and the end of a long-running recession in Europe that had dented U.S. exports.
MARKET COMMENTARY | Fri Mar 07 12:59:19 PST 2014
American Funds investment analyst Brad Barrett explains how Google improved upon existing search engines and developed a business model that ensured its domination of the search business.
American Funds economist Darrell Spence asserts that the U.S. economy is nearing the end of its deleveraging cycle and points to fading headwinds in suggesting that growth this year could exceed 3% for the first time since the end of the recession.
American Funds investment analyst Brad Barrett illustrates why a technological advancement needs the proper business model and timing to market, in addition to the original innovative idea, in order to succeed.
American Funds investment analyst Brad Barrett explains how Netflix has succeeded in gaining home entertainment industry share by employing a business model based on achieving scale.
American Funds economist Darrell Spence estimates the range of increase in U.S. bond yields given the gradual approach to QE tapering expected from the Fed and today’s low rate of inflation.
American Funds investment analyst Brad Barrett discusses how Google’s culture of continuous improvement and innovation influenced its business model for entering the mobile phone business with Android.
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.
American Funds Portfolio Manager Jim Rothenberg discusses how, in the long term, the right active manager can work out better for many investors than market timing and index investing.
American Funds Portfolio Manager Jim Rothenberg discusses the reliance of China’s future growth on the strength of the overall global economy, despite a rise in Chinese domestic consumption.
American Funds Portfolio Manager Jim Rothenberg discusses the health of companies based around the globe and finds reasons for optimism, as well as some concerns, going into 2014.
American Funds Portfolio Manager Jim Rothenberg discusses the overall state of company valuations in light of growth in the markets, finding both low and high valuations, but much middle ground.
Capital Group portfolio manager Jonathan Knowles discusses innovative companies such as Amazon, Google and LinkedIn, and where the opportunities are in the U.S. from a global perspective.
Capital Group portfolio manager Jonathan Knowles discusses his focus on free cash flow and return on capital, and how they tie in with having a very concentrated portfolio.
Portfolio manager Jonathan Knowles discusses how investing in Africa presents challenges as well as significant opportunities.
An economist discusses the potential for the U.S. economy to break free of its sluggish post-recession growth now that headwinds such as government retrenchment and a weak European export picture have subsided.
MARKET COMMENTARY | August 2014 | FEATURING Jonathan Knowles
Exhibit 1: Many e-commerce companies have great growth potential as online sales are still a small percentage of total retail sales.
Portfolio manager Jonathan Knowles shares his views on building concentrated portfolios and why he likes health care stocks. He talks about how U.S. companies are among the most disciplined in their capital allocation and why many of them tend to be great long-term investments. He also discusses:
Many investors believe that valuations in the U.S. are full. How do you currently view the U.S. market, especially relative to other markets on a global basis?
MARKET COMMENTARY | July 2014 | FEATURING Tim Armour
World Market Returns (May 30, 2009 — May 30, 2014)
It has been more than five years since the financial crisis. We’ve experienced strong equity market returns, but a lackluster economic recovery. At the midpoint of 2014, where do you think we are in the recovery process and what is your outlook?
American Funds Portfolio Manager Jim Rothenberg discusses the likelihood that the U.S. Federal Reserve will cut back on quantitative easing after tapering speculation for most of 2013 proved incorrect.
American Funds Portfolio Manager Jim Rothenberg discusses the unexpected strength of the U.S. market in 2013, how it led activity in the global economy and how the U.S. and global economies will influence each other in 2014.
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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