Editor, Investment Strategy. Europe, Middle East and Africa, London
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Nov 26, 2012

Build up euro equity as new emerging market: Pioneer

LONDON (Reuters) – Euro zone equities will be the star performers of 2013 and investors should seize all opportunities to build up this portfolio, Pioneer Investments’ Chief Investment Officer said on Monday.

Branding European equities as “The Next Emerging Markets”, Pioneer Group CIO Giordano Lombardo told the Reuters Global Investment Outlook Summit for 2013 that euro zone equities were undervalued, under owned and would benefit from a stabilization of both the underlying euro zone economy and the wider investment climate.

Nov 22, 2012
via Global Investing

Weekly Radar: Bounceback as year winds down


Yet another Greek impasse, a French downgrade, ongoing DC cliff dodging and a downturn in Citi’s G10 economic surprise index (though not yet in the US one) could have been plausible reasons this week to extend the post-election global markets swoon. But at 8 consecutive days in the red up to last Friday, that was the longest losing streak since last November, and a lot of froth had been shaken off these year-end markets already.

We’ve seen a decent bounceback in nearly all risks assets instead. That may be partly due to volume-sapping Thanksgiving week and partly due to the fact that more and more funds think the year is effectively over now anyhow. The only big wildcard left is the timing of an fiscal agreement stateside and few managers now honestly believe there won’t be some sort of a deal. (Deutsche, for the record, said this week that the divide between the sides over tax is much less than many assume).  Greece is a slower burner but again, few people believe it will be hung out to dry any time soon and a deal on the next tranche – whatever about deep and meaningful OSI, payment moratoriums and loan rate cuts – will most likely be reached next week at the latest. Talk of a EFSF-funded Greek debt buyback meantime has helped pushed its debt yields to the lowest since the restructuring.  And the French downgrade was probably the least surprising move of the past five years.

Nov 16, 2012

Bulls, not bears, go into hibernation

LONDON, Nov 16 (Reuters) – The longest losing streak on
world markets since the darkest days of the euro crisis in late
2011 shows how reluctant investors are to trust in any sustained
recovery after years of crisis.

Global equity indices on Friday flirted with
a record eight consecutive days in the red for the first time in
a year. Do a sweep of all related risky assets around the world
and there’s been a similar pattern of pullback.

Nov 15, 2012
via Global Investing

Weekly Radar: In the shadow of the cliff


It’s been another rum old week market-wise, with global stocks off another 2 percent or more and recording seven straight days in the red for the first time since August. Throw any spin you like at the reasoning, but the pretty predictable post-election hiatus on U.S. fiscal cliff worries now seem to be front and centre of everything. And that will just has to play itself out now, leaving markets stuck in this funk until they come up with the fix. The running consensus still seems to be that some solution will be reached, but no one wants to be too brave about it. And given the cliff is one of the few good explanations for the sharp divergence between the equity market and still rising US economic surprises,  you can see why many feel the US fiscal standoff is merely delaying a resumption of the rally.

The euro zone story has rumbled again of course, with the Greek hand-to-mouth financing, pressure for official sector debt write-offs there and another nervy wait for the latest tranche of bailout funds. Anti-austerity protests in Greece, Spain, Portugal and elsewhere meantime stepped up a gear this week and Q3 data out today confirmed the euro bloc back in recession.

Nov 14, 2012

New baby booms won’t avert dependency dilemma

LONDON (Reuters) – With so many fretting about the rapid ageing of European societies and the rising burden of old-age dependency, it’s easy to overlook the mini baby booms in many countries.

Often apocalytic headlines on the greying of major economies and the “pensions timebomb” sit oddly with a growing body of data and reports of rising births and recovering fertility rates in many European economies, notably Britain.

Nov 14, 2012

Analysis: New baby booms won’t avert dependency dilemma

LONDON (Reuters) – With so many fretting about the rapid ageing of European societies and the rising burden of old-age dependency, it’s easy to overlook the mini baby booms in many countries.

Often apocalyptic headlines on the graying of major economies and the “pensions time bomb” sit oddly with a growing body of data and reports of rising births and recovering fertility rates in many European economies, notably Britain.

Nov 9, 2012

Playing the U.S. cliff just like euro survival

LONDON (Reuters) – Battle-weary investors heading into another intense and market-sensitive period of political brinkmanship in Washington may do well to consult their European campaign maps.

While the two years of attrition in European markets may not be a blueprint for victory per se, they may provide some clue as to how investor minds better equipped to deal with hard data and mathematical models should navigate political minefields.

Nov 8, 2012
via Global Investing

Weekly Radar: Cliff dodging and Euro recessions


Most everything got swept up in the US election over the past week but, for all the last minute nail biting  and psephology, it was pretty much the result most people had been expecting all year. So, is there anything really to read into the market noise around the event? The rule of thumb in the runup was a pretty crude — Obama good for bonds (Fed friendly, cliff brinkmanship, growth risk) and Romney good for stocks (tax cuts, friend to capital/wealth, a cliff dodger thanks to GOP House backing and hence pro growth). And so it played out Wednesday. But in truth, it’s been fairly marginal so far. Stocks were down about 2 pct yesteray, but they’d been up 1 pct on election day for no obvious reason at all. But can anyone truly be surprised by an outcome they’d supposedly been betting on all along. (Just look at Intrade favouring Obama all the way through the runup). Maybe it’s all just risk hedging at the margins. What’s more, like all crude rules of thumb, they’re not always 100 pct accurate anyway.  Many overseas investors just could not fathom a coherent Romney economic plan anyway apart from radical political surgery on the government budget that many saw as ambiguous for growth and social stability anyhow.  Domestic investors may more understandably wring their hands about hits on dividend and income taxes, but it wasn’t clear to everyone outside that that a Romney plan was automatically going to lift national growth over time anyhow.

That said, it was striking on Wednesday that even though global funds were mostly relieved the Fed won’t now be shackled after 2014, nearly everyone still expects the fiscal cliff to be resolved by compromise. Whether that’s wishful thinking or the smartest guess remains to be seen. But, just like in Europe, it means they are at the very least going to have endure a barrage of political noise in headlines and endless scaremongering before any deal is ultimately forthcoming. Some say the nature of the GOP defeat, even with an incumbent saddled with an 8 pct unemployment rate, will force enough moderate Republicans to seek distance from Tea Party and seek compromise. But others point out that post-Sandy relief  spending may also bring the dreaded debt ceiling issue forward sooner than expected now too. All in all, the overwhelming consensus still betting on an eventual cliff dodge may be the most worrying aspect of market positioning and may be the best explanation the slightly outsize and sudden stock market reaction.

Nov 7, 2012

For global investors, Fed relief trumps fiscal angst after U.S. poll

LONDON (Reuters) – The world’s biggest investors expect a modest fillip for global bonds and stocks from the re-election of President Barack Obama, as anxiety eases over White House policy toward the Federal Reserve and China.

Even though Obama, who beat Republican challenger Mitt Romney to win a second term, now faces a stiff battle with a Republican-controlled House of Representatives over the looming ‘fiscal cliff’, investors reckon dissipating uncertainty over Fed policy should be the dominant reverberation worldwide.

Nov 2, 2012
via Global Investing

INVESTMENT FOCUS-Bond-heavy overseas funds want Obama win


Overseas investors, many of whom are creditors to the highly-indebted U.S. government, reckon a re-election of President Barack Obama would be best for world markets even if U.S. counterparts say otherwise.

For the second month in a row, Reuters’ monthly survey of top fund managers around the world was evenly split when asked whether a win for incumbent Democrat Obama or Republican hopeful Mitt Romney in the Nov. 6 presidential poll would be good for global markets.

    • About Mike

      "Mike Dolan is Reuters' Investment Strategy Editor in Europe. He has been a correspondent and editor for the past 20 years, working for Reuters from London and Washington DC in a variety of roles covering global policymaking, economics and investment trends."
      Tralee, Co Kerry
      Joined Reuters:
      Reuters Editor of the Year, 2009. Reuters multimedia journalist of the year award, 2011
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