Manulife Asset Management offers insight in “Global Intelligence Interim Outlook: Autumn 2017”

Among the topics covered in the report:

“Quiescent” Global Equity Markets

Bob Boyda, Head of Capital Markets and Strategy, thinks that global capital markets have become boring. The message from the options market, he says, is that investors are highly content and not at all interested in buying protection.

“Global equity markets appear so quiescent that even the threat of nuclear war with a rogue nation like North Korea caused no more than a day’s disruption in the steady march to higher equity prices. During the past quarter, many global equity bourses in the developed world merrily registered new all-time highs,” he observes.

As for bond yields and interest rates, “Traditionally, higher bond prices and the accompanying lower yields represent a measure of anxiety and a search for safety; except not this time. Lower yields on bonds appear to signal another form of low anxiety specifically about the trajectory of central bank policy: lower for longer continues to dominate the hearts and minds of global capitalists.” Furthermore, “At last, after a decade of singing the praises of US High Yield debt, we believe it is time to begin the process of reducing exposure.”

Regarding the U.S. dollar, Mr. Boyda says: “A lower U.S. Dollar will add to U.S. profits particularly among the major listed companies in the S&P 500 who derive up to 40 percent of earnings from overseas.1 The shrinking value of the U.S. Dollar has also boosted the relative value of non-U.S. investments. For U.S. investors, non-U.S. developed market equities are up nearly 20 percent year to date and Emerging Market equities are up nearly 30 percent.”

He does believe that the risk remains elevated for a short-term “garden variety” correction in U.S. equities.

Can Central Banks All Reverse Course Simultaneously?

Chief economist Megan Greene is paying attention to what’s next for Central Banks. “After nearly a decade of monetary policy accommodation, central banks seem to be trying to shift into a new paradigm, whereby they pass the baton over to governments. This path is rife with risk, and central banks may find that rather than passing the baton along to governments, they could end up dropping it altogether.”

She worries about the possible impact. “The Fed, ECB, BoJ and PBoC are all likely to provide less monetary stimulus next year, though they are all doing it for different reasons and in different ways,” Ms. Greene writes.  “In our view, the seeming focus of global markets on the Fed tapering its balance sheet is a red herring. What investors should pay attention to is the fact that we will likely see the Fed shrinking its balance sheet, the ECB tapering its QE purchases, the BoJ undergoing an unofficial stealth taper and the PBoC pulling back on stimulus all at the same time.  If there is less stimulus provided by all of these central banks simultaneously, we are likely to see an economic slowdown unless governments step in to fill the gap.”

Key Messages from Manulife Asset Management fund managers:

  • Most managers regard geopolitical risk as a top concern, in particular, rising tensions between the U.S. and North Korea.
  • Most believe the U.S. economy remains fundamentally sound, with the labor market remaining healthy, but note that this has yet to lead to a correspondingly healthy inflation rate.
  • As highlighted by Megan Greene, most managers expect the Fed and ECB to begin reducing or tapering their monetary accommodation and will be monitoring both central banks for signs of movement.

Link to report:   

About Manulife Asset Management

Manulife Asset Management is the global asset management arm of Manulife Financial Corporation (“Manulife”). We provide comprehensive asset management solutions for investors across a broad range of public and private asset classes, as well as asset allocation solutions. We also provide portfolio management for affiliated retail Manulife and John Hancock product offerings.

Our investment solutions include public and private equities and fixed income, timberland, farmland, real estate, power and infrastructure, oil and gas, renewable energy, and mezzanine debt. We operate in the United States, Canada, Brazil, the United Kingdom, New Zealand, Australia, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, the Philippines, as well as through a China joint venture, Manulife TEDA. We also serve investors in select European, Middle Eastern and Latin American markets.

As at June 30, 2017, assets under management for Manulife Asset Management were approximately C$480 billion (US$370 billion, GBP£285 billion, EUR€324 billion). Additional information may be found at

About Manulife

Manulife Financial Corporation is a leading international financial services group that helps people achieve their dreams and aspirations by putting customers’ needs first and providing the right advice and solutions. We operate as John Hancock in the United States and Manulife elsewhere. We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions. At the end of 2016, we had approximately 35,000 employees, 70,000 agents, and thousands of distribution partners, serving more than 22 million customers. As of June 30, 2017, we had over $1 trillion (US$780 billion) in assets under management and administration, and in the previous 12 months we made $26.7 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as ‘MFC’ on the Toronto, New York, and the Philippine stock exchanges and under ‘945’ in Hong Kong.Follow Manulife on Twitter @ManulifeNews or visit or

1 S&P: S&P 500 Foreign Sales Decline To 43.2%, at Lowest Level Since 2003, July 20, 2017

SOURCE Manulife Asset Management

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About the Author: Bob Cooper

Bob Cooper is Canadian Business Tribune''s senior editor. He is also a nationally syndicated newspaper columnist and a bestselling author. He lives in London Ontario and covers the intersection of money, politics and finance. He appears periodically on national television shows and has been published in (among others) The National Post, Politico, The Atlantic, Harper’s,, Vice and He also has served as a journalist and consultant on documentaries for CBC and Global News . In 2014, he was the winner of the Society of American Business Editors and Writers' investigative journalism award, and the winner of the Izzy Award for Journalism from Ithaca College's Park Center for Independent Media. He was also a finalist for UCLA's Gerald R. Loeb Award and Syracuse University's Mirror Award. Before becoming a journalist in 2006, Sirota worked in Washington for, among others, U.S. Rep. Bernie Sanders, the U.S. House Appropriations Committee Minority Staff and the Center for American Progress.