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  • Central banks and broken promises | Thinking Aloud
    a conflict between promise credibility and mandate credibility the central bank should always choose mandate credibility Promise credibility is nice to have but is only ever instrumentally valuable in so far as it helps to achieve mandate goals At times central banks have not always behaved this way For example the U S Federal Reserve s decision to hike interest rates in December 2015 looked at times more like an attempt to stand by their earlier 2015 guidance that rates would be hiked sometime that year rather than the result of a mandate driven cost benefit analysis But the mandate should be the only thing that ultimately matters The downward revision of the Fed s dots and recent speeches from Yellen stressing a cautious approach in response to falling inflation expectations can be interpreted as the Fed backing away from its promise credibility of delivering four hikes this year in the service of achieving its mandate goal of higher inflation This puts us in a position to better judge the claims that particular central banks may be undermining their credibility To the extent that this represents a complaint that the central bank has failed to live up to some form of guidance has undermined promise credibility we should be more relaxed So long as the Fed s eyes remain focused on the long term prize of achieving its mandate a central bank may be well within its rights to change from the advertised policy path As the economy evolves and the facts change central bankers are bound to need to change their minds and policy Investors should not be naïve enough to believe every central bank promise Important Information Fixed income securities are subject to certain risks including but not limited to interest rate changes in interest rates may cause a decline in the market value of an investment credit changes in the financial condition of the issuer borrower counterparty or underlying collateral prepayment debt issuers may repay or refinance their loans or obligations earlier than anticipated and extension principal repayments may not occur as quickly as anticipated causing the expected maturity of a security to increase Image credit Gianni Dagli Orti Corbis Ref 23211 310316 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture central banks and broken promises Select Article URL Close Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/central-banks-and-broken-promises (2016-04-26)
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  • The Fed and the market: cat and mouse | Thinking Aloud
    rates After all the Fed has shown a tendency to be too optimistic in its forecasts over the past few years And the lack of scope to reverse course creates an asymmetry in policy setting for the Fed meaning they will likely be keen to avoid tightening more than they have suggested Conversely given that less tightening than suggested is not such an issue as it would not be a major shock to markets or difficult to reverse it is still quite possible that we get one or no hikes in 2016 Current market pricing reflects this with the Fed Funds rate path still materially below the dots Armed with knowledge of this new upper bound the big question that we are asking ourselves is has the risk of fewer than two hikes increased As far as we can see not by that much So now that the Fed has revised down their rate hike projections to something realistic there s a very real possibility that investors actually believe them The result a convergence of opinions as to the number of rate hikes this year with two being the magic number Cat and mouse is back on Important Information Fixed income securities are subject to certain risks including but not limited to interest rate changes in interest rates may cause a decline in the market value of an investment credit changes in the financial condition of the issuer borrower counterparty or underlying collateral prepayment debt issuers may repay or refinance their loans or obligations earlier than anticipated and extension principal repayments may not occur as quickly as anticipated causing the expected maturity of a security to increase Ref 23211 240316 2 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture the fed and the market cat and mouse Select Article URL Close Bonds Central banking Economics Fixed Income Interest rates Monetary policy North America Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Bonds Central banking Economics Fixed Income Interest rates Monetary policy North America Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/the-fed-and-the-market-cat-and-mouse (2016-04-26)
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  • US inflation: finally taking off? | Thinking Aloud
    homebuyers Third wages are rising at a faster pace as the labor market approaches full employment These three developments are underpinned by fundamentals and are probably here to stay suggesting that the upturn in core inflation will be sustained over the year or so ahead The speed of the pick up in core inflation challenges the inflation forecasts of the Fed and of markets The median forecast of Fed officials at their December meeting was for core PCE inflation to increase to 1 6 by the end of 2016 This path could require four hikes of the federal funds rate over the course of the year The market also expects inflation of 1 6 in a year s time measured using one year breakeven inflation in the bond market but anticipates just a 65 chance of a single rate hike by then Still as we have seen core PCE inflation is already 1 7 and likely to rise In that event all previous predictions about what the Fed might or might not do may be off Important Information Projections are offered as opinion and are not reflective of potential performance Projections are not guaranteed and actual events or results may differ materially Ref 23211 150316 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture us inflation finally taking off Select Article URL Close Central banking Developed Economics Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Central banks and broken promises Central banking Developed Economics Interest rates Monetary policy Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/us-inflation-finally-taking-off (2016-04-26)
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  • Helicopters won’t save us | Thinking Aloud
    spend who at present are hoarding cash given the uncertain environment More could also be done in labor markets One measure that can help would be for governments to fund schemes that retrain the unemployed and much more actively match them with available vacancies Sadly we may not see the action required following the G20 meeting Increasing spending on long term capital projects is disliked by many political parties across the developed world who have put a great deal of stock in the idea that austerity alone will return our economies to health It may not Action and spending may be the only way of digging ourselves out of this malaise A group of finance ministers and central bank governors from 19 of the world s largest economies and the European Union Important Information Fixed income securities are subject to certain risks including but not limited to interest rate changes in interest rates may cause a decline in the market value of an investment credit changes in the financial condition of the issuer borrower counterparty or underlying collateral prepayment debt issuers may repay or refinance their loans or obligations earlier than anticipated and extension principal repayments may not occur as quickly as anticipated causing the expected maturity of a security to increase This article was originally published in CityAM on February 26 2016 Ref 23211 010316 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture helicopters wont save us Select Article URL Close Central banking Economics Fiscal policy Global Monetary policy Multi Asset Related Articles Japan why faltering reforms shouldn t hide corporate achievements Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Creating value through effective stewardship Central banking Economics Fiscal policy Global Monetary policy Multi Asset Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/helicopters-wont-save-us (2016-04-26)
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  • Hunting high and low | Thinking Aloud
    as possible and to allocate risk carefully As multi asset investors we look to add value within asset classes but we believe it is asset allocation that is the key determinant of returns By investing in asset classes that enhance diversification it can be possible to smooth overall returns and prevent the erosion of capital But while diversification is a good thing one needs to be careful into what one diversifies Diversifying into poor quality assets is the first step along the road to penury So we still need to do our homework know our assets and have a strong view as to what they are worth Fiat money is currency that a government has declared to be legal tender but is not backed by a physical commodity Important Information Foreign securities are more volatile harder to price and less liquid than U S securities They are subject to different accounting and regulatory standards and political and economic risks These risks are enhanced in emerging markets countries Fixed income securities are subject to certain risks including but not limited to interest rate changes in interest rates may cause a decline in the market value of an investment credit changes in the financial condition of the issuer borrower counterparty or underlying collateral prepayment debt issuers may repay or refinance their loans or obligations earlier than anticipated and extension principal repayments may not occur as quickly as anticipated causing the expected maturity of a security to increase Diversification does not ensure a profit or protect against a loss in a declining market Ref 23211 190216 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture hunting high and low Select Article URL Close Central banking Economics Global Interest rates Multi Asset Related Articles Japan why faltering reforms shouldn t hide corporate achievements Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Creating value through effective stewardship Central banking Economics Global Interest rates Multi Asset Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/hunting-high-and-low (2016-04-26)
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  • With Fed policy, hindsight isn’t helpful | Thinking Aloud
    follow through on this semi promise Had it failed to hike its communication credibility would probably have been undermined But long term credibility comes from doing the right thing being flexible enough to adjust to the situation and changing policy when the facts change as our economist friend Mr Keynes would have advocated It may be that this is what the Fed ends up doing in 2016 While recent volatility does not suggest the 2015 hike was a mistake it might mean that the Fed should change its plans for 2016 It is currently signaling that it will hike three to four times this year which may no longer be appropriate Recent market moves may not have been caused by economic weakness but it could cause economic weakness Market weakness can create economic weakness which then justifies the market weakness The Fed will probably want to push back on this by signaling a slightly easier path But this is certainly not the same as saying the earlier hike was a mistake Ref 24533 100216 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture with fed policy hindsight isnt helpful Select Article URL Close Central banking Economics Interest rates North America Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Central banking Economics Interest rates North America Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking statements regarding future events or future financial performance of countries

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/with-fed-policy_-hindsight-isnt-helpful (2016-04-26)
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  • It’s déjà vu “oil” over again | Thinking Aloud
    Iranian oil and a big surge in supply from the new shale producers As a result the oil price collapsed again the fourth and most recent time I ve seen the price cut in half Yet even as I write I am inundated with advice suggesting that there remains downside bias in the price Also that the price is telling me something generally a bad something But at the same time the high yield or junk bond market is closed to oil companies with the consequent impact on production Everyday there is a screech of production brakes from whichever oil company is reporting And who knows demand may even increase given the halving of the price of this popular commodity After reviewing this short rather selective history lesson I believe we can conclude that analysts are not very good are forecasting the oil price Second we can conclude that the gloomiest forecasts at the bottom and the most optimistic forecasts at the top are probably wrong Something a little less dramatic is probably a more likely outcome although this view is less interesting to talk about and certainly less newsworthy Finally we can conclude that there is virtually nothing that we are seeing today that we have not seen in a similar form over the past 25 years It is not different this time in our view It is not different this time in our view In fact we believe it is the same We will likely see growth in Asia once again we will likely see supply restraint from producers once again and there will likely be renewed turmoil in the Middle East While we don t know when these events will occur it is almost probable that they will and that the oil price will react accordingly as it has always done Ref 24533 080216 1 Important Information There are special risks associated with an investment in commodities including market price fluctuations regulatory changes interest rate changes credit risk economic changes and the impact of adverse political or financial factors Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture its dj vu oil over again Select Article URL Close Alternatives Commodities Economics Global Multi Asset Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Asian property seeking excitement without danger All LPs are equal but some are more equal than others Paradox for emerging market positivity Alternatives Commodities Economics Global Multi Asset Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright

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  • Bank of Japan: shock treatment | Thinking Aloud
    the commitment to the cause The economy has slowed and inflation expectations have weakened The BoJ did not appear to be willing to react January s action is bold and the surprise factor may well help cement the regime shift in the market s eyes Although the element of surprise is now reduced further cuts into negative territory could follow Chart with data points plotting the targets for appropriate federal funds rates made by Federal Open Market Committee FOMC participants Abenomics are the economic policies set forth by Japan s Prime Minister Shinzo Abe Important Information Foreign securities are more volatile harder to price and less liquid than U S securities They are subject to different accounting and regulatory standards and political and economic risks These risks are enhanced in emerging markets countries Ref 23211 040216 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture bank of japan shock treatment Select Article URL Close Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Links Contact Us Learn more about Aberdeen This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking statements regarding future events or future financial performance of countries markets or companies These statements are only predictions opinions or estimates made on a general basis and actual events or results may differ materially This information does not provide financial or investment advice

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