American Funds ®

Market Commentary

January 2014

U.S. Leading Global Economic Charge Into 2014

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.



James F. Rothenberg


Kevin Clifford: Hello. I’m Kevin Clifford, President of American Funds. As we approach the end of 2013, I’m pleased to have with me Jim Rothenberg. Jim is the chairman of Capital Group as well as a portfolio manager with The Growth Fund of America®. Jim, thanks so much for being with us today.

Jim Rothenberg: My pleasure, Kevin.

Kevin Clifford: This time last year when we sat down, you took a look at the world, and we reflected on the fact that you thought the United States would continue to have positive but muted growth, perhaps a recession in Europe and continuing growth in emerging markets. As you reflect on 2013 and look ahead to 2014, how does the world look to you?

Jim Rothenberg: Probably the biggest surprise in 2013 was really how strong the U.S. market has been. We’ve seen some recovery in some of the other parts of the world; some surprising strength in Europe, even though the economy hasn’t been that good; and selectively, we’ve seen some progress in some emerging countries. But the U.S. has been the big surprise in 2013, and I suspect that will continue into 2014. But sometime in 2014, my guess is that we’ll probably see some strength developing in other parts of the world.

Our colleague Rob Lovelace gave a talk not too long ago about this notion that we do ourselves a disservice when we talk about investing in the U.S. and we talk about investing in Europe or in Asia, because we talk about investing, really, in companies. And companies have mixes of business, regardless of where their domicile is. So we can talk about the U.S. market, but we also need to remember that a company like Coca-Cola, which is part of the U.S. market, gets about 80% of its profits outside the U.S.

So I’m really talking about economic activity. I think it becomes very important in 2014 that economic activity in some other parts of the world begins to pick up somewhat. I think it’s necessary for that to happen for the U.S. to continue to make progress, and I also think it will help globally with all of the issues around the world that we see, and we see plenty of issues.

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