CIO Insights: The Value in Volatility

Phillip N. Davidson

Phillip N. Davidson, CFA, Chief Investment Officer U.S. Value Equity

While the term “volatility” is often associated with risk, as risk managers we respect volatility and view it as an essential component of active security selection.

There has been a significant rebound in domestic equity markets over the past five years and a low-volatility equity environment—especially over the last three years—a combination of factors that has proved challenging for our process. Conversely, we believe the ideal environment for active value management is one in which securities are more likely to be mispriced and markets are less efficient (which usually occurs during increased uncertainty and volatility).
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Chart of the Week: U.S. Cities in the Employment Sweet Spot

Chart of the WeekIf jobs are hard to come by where you live, you might want to check out America’s hottest markets for employment. A recent study conducted by WalletHub sought to assess the relative strength of 150 local job markets through 16 metrics ranging from employment growth to job opportunities. The best cities to find a job included Seattle, Washington; Des Moines, Iowa; Gilbert, Arizona; Sioux Falls, South Dakota; and Freemont, California. Conversely, the worst cities to find a job in 2015 are San Bernardino, California; Moreno Valley, California; Detroit, Michigan; Hialeah, Florida; and Memphis, Tennessee. Continue reading

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CIO Insights: Normalization Creates Global Opportunities

Mark S. Kopinski

Mark S. Kopinski
Co-Chief Investment Officer,
Global and Non-U.S. Equity

Keith Creveling, CFA

Keith Creveling, CFA
Co-Chief Investment Officer,
Global and Non-U.S. Equity

It appears we have reached an inflection point in the global equity markets. After a challenging year, many global investors expect a return to the higher levels of volatility and more muted returns that were previously considered “normal.”

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Q1 2015 Global Equity Outlook: Shifting Global Conditions

Mark S. Kopinski

Mark S. Kopinski
Co-Chief Investment Officer, Global and
Non-U.S. Equity

Keith Creveling, CFA

Keith Creveling, CFA
Co-Chief Investment Officer, Global and
Non-U.S. Equity

Two major news items dominated events this past quarter. The collapse of oil prices and the further decoupling of the recoveries of the U.S. and the other global economies captured investors’ interest and drove performance in the fourth quarter. These shifting global conditions have led us to become skeptical of the sustainability of the
global recovery, particularly given the disparity in the extent of recovery seen in the various world economies.

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Q1 2015 Inflation Monitor

Our Global Macro Strategy Team believes U.S. inflation should remain largely contained during the next 12 months. See what future scenarios we expect, the probabilities we’ve assigned to them, and which indicators we’re monitoring.

Download the full Q1 2015 Inflation Monitor with our inflation scenarios, expectations and other data. Continue reading

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CIO Insights: Normalization, with Higher Risks and Yields

Dave MacEwen

G. David MacEwen Co-Chief Investment Officer

“Market Normalization” is a prominent theme for our Global Macro Strategy Team in 2015—at least in the U.S.—as the Federal Reserve (Fed) further unwinds its extraordinary monetary easing programs initiated in 2008-09. The Fed’s programs muted risk, volatility, and return dispersion, which are starting to rebound to more normal levels.

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Chart of the Week: Child Care Pinching the Family Budget

Chart of the WeekRising costs for child care have rivaled and even surpassed many other family expenses, including housing, transportation and food, squeezing the household budget. Find more cost comparisons in today’s Chart of the Week infographic. Continue reading

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Q1 2015 Fixed Income Macro Outlook

Our Global Macro Strategy Team provides its perspective for the first quarter of 2015. Download the complete Q1 2015 Fixed Income Macro Outlook.

Key topics addressed this quarter:

  • U.S. Economy: Moderate growth with increased possible upside
  • U.S. Inflation: Muted in near term but still long-term concerns
  • U.S. Monetary Policy: QE3 (a third round of quantitative easing, or QE) completed; possible rate hikes on the horizon
  • U.S. Interest Rates: Range-bound with upward bias toward normalization, but constrained by non-U.S. factors
  • Global Economy: Growing divergence from the U.S. in terms of weaker economic growth and more aggressive monetary policies

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CIO Insights: Risks and Rewards from Normalizing Markets

Dave MacEwen

G. David MacEwen
Co-Chief Investment Officer

Victor Zhang

Victor Zhang
Co-Chief Investment Officer

During the past five years, unusually accommodative monetary policies muted risks and encouraged investors to increase their risk exposure. If the U.S. maintains a path of progressively less-accommodative monetary policy, we expect market risk to return to more normal, two-way levels. This presents both potential challenges and opportunities for investors.

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Chart of the Week: Get a Job with the Right College Major

Chart of the WeekWith jobs seemingly harder to come by and employers being more selective with perspective candidates, it might help to know which college majors will make you more employable. According to a recent survey conducted by Express Employment Professionals, business (27%), engineering (20%), and accounting (14%) were the majors that made people most employable. It is the second consecutive year that business was the top major for jobs in the survey.     Continue reading

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