Archived material may contain dated performance, risk and other information. Current performance may be lower or higher than the performance quoted in the archived material. For the most recent month-end fund performance information visit www.calamos.com. Archived material may contain dated opinions and estimates based on our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions at the time of publishing. We believed the information provided here was reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance reflected at NAV does not include the Fund’s maximum front-end sales load. Had it been included, the Fund’s return would have been lower.

Archived on July 17, 2019

Another Bear Market Rally or the Start of the Next Bull?

Global Long/Short Team Perspectives by Michael Grant

The global equity rally that emerged forcefully in mid-February has been decried by some as the unnatural outcome of short covering and excessive bearishness.

Of course, this may be true. But most major bottoms in equities start in such a fashion that the upturn in corporate fundamentals is rarely visible at turning points. To be fair, there has been progress on many issues that unsettled investors in January including greater clarity regarding euro zone monetary policy, Chinese currency stability and the Fed’s pace of future rate hikes.

But investors remain deeply skeptical, with many convinced that the U.S. economy stands on the precipice of recession. This conclusion starts with the global recession that is evident across many manufacturing industries, of which energy and commodities are the most notable. The U.S. economy has remained resilient through much of this, partly because the U.S. consumer is benefiting from healthy employment markets and the substantial drop in oil prices.

But now, the question on the mind of many is whether the manufacturing sector will pull the U.S. consumer into recession or, having bottomed, will the sector recover along with the major economies into 2017?

Part of the answer may lie in the latest regional PMI releases, which have been striking. The PMIs, or Purchasing Manager Indices, are coincident reflections of what is happening across U.S. manufacturing. And in March, these releases witnessed meaningful upside surprise. In my experience, the biggest surprises for these releases tend to occur at inflection points.

As the charts below highlight, the Empire State Manufacturing Survey, the Philly Fed Business Outlook Survey and the Richmond Fed Survey have all moved back into expansion territory.

Figure 1. Empire State Manufacturing SurveyJanuary 2013 – March 2016 Empire State Manufacturing Survey Source: Source: Bloomberg

Figure 2. Philly Fed Business Outlook SurveyJanuary 2013 – March 2016 Philly Fed Business Outlook Survey Source: Source: Bloomberg

Figure 3. Richmond Fed SurveyJanuary 2013 – March 2016 Richmond Fed Survey Source: Source: Bloomberg

On April 1, we will get more insight into the state of economic activity with the release of the U.S. payroll reports, the ISM Index and the Global PMI reports. If these highlight further upside momentum, I believe investors should give the U.S. equity market the benefit of the doubt. In other words, this bull move could last much longer than anticipated, as global GDP finally improves through the latter half of 2016.


    Past performance is no guarantee of future results. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

    Purchasing Managers Index (PMI) measures the strength of the manufacturing sector. The Empire State Manufacturing Survey is the monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. The Philly Fed's Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, which covers eastern Pennsylvania, Delaware and southern New Jersey. The Richmond Fed Survey is measure of broad activity in the manufacturing sector located in the Fifth Federal Reserve District and published by the Federal Reserve Bank of Richmond.

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    Archived material may contain dated performance, risk and other information. Current performance may be lower or higher than the performance quoted in the archived material. For the most recent month-end performance information, please CLICK HERE. Archived material may contain dated opinions and estimates based on our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions at the time of publishing. We believed the information provided here was reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

    Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Performance reflected at NAV does not include the Fund’s maximum front-end sales load. Had it been included, the Fund’s return would have been lower. For the most recent month-end fund performance information visit www.calamos.com.