The debt issues faced by the developed world, macro imbalances, and the unpredictability of global policy actions make this an especially uncertain environment. However, the Fed continues to make low-risk assets very unappealing. Overall, global equities appear reasonably priced in light of the paltry real returns on bonds.
Articles in this publication consider the impact of long-term debt reduction on the economy and investments, a less taxing way to own hedge funds, whether equities have reached the end of an era, the interplay of the end of QE2 and municipal bonds, and assurance that we are far from having the decline of the dollar be a policy concern.
Weighing the evidence most often cited by bullish investors, the authors find it to be predicated primarily on a thinly supported assumption that strong corporate earnings growth will continue. The bear's case, on the other hand, appears more solid as it focuses on weakness in the underlying drivers of corporate earnings growth as well as on long-term structural debt and deficit issues.
The consolidation phase for equities appears to be reaching an end, causing Credit Suisse to reverse part of a tactical downgrade from February and take equities to 2 percent overweight on a one- to three-month basis. That rate would be increased if the markets fell further or the outlook for China became clearer.
This report by the World Economic Forum looks at the strategic importance of long-term investing for financial stability and the role of wealthy families as long-term investors alongside institutional actors such as sovereign wealth funds, endowment foundations, pension funds, and other entities.
Several mega-trends point to significant growth in the energy sector. These include the development of unconventional reservoirs; the increasing service intensity of finding, developing and producing oil and gas; the exploration and development of ultra-deep water and other frontier areas; and the monetization of stranded gas resources worldwide.
As the balance of growth shifts from developed to developing nations, the world clamors for natural resources. Land capable of satisfying that demand can help investors reduce portfolio volatility and protect principal while providing steady income or appreciation as well as a hedge against inflation.
This summary report of the second quarter provides a high-level view of global economic data as well as global and U.S. economic trends. In addition, it examines individual market segments, including U.S. fixed income, U.S. equity, global equity, international equity, hedge funds, private equity, and real assets.
To achieve lower borrowing costs and longer payment schedules for bond-issuing eurozone countries, bond alchemists (or policymakers) must ensure that the banks holding periphery bonds don't suffer significant losses, that the issuing countries can return to the markets, and that investors are confident the countries won't default.
Investors buy gold out of fear that the economic and political infrastructure we count on when we buy stocks and bonds is degrading. And gold booms inevitably end with a bust. The better strategy may be to build a reasonably sized position in diversified commodities, including gold; play close attention to sound entry points; and rebalance religiously.