Central banks around the world, especially the European Central Bank (ECB), have done a pretty good job of preventing the downside, but they really have not kicked up the upside with respect to economic growth, said John Silvia, chief economist at Wells Fargo Securities.
Both growth and inflation expectations have been lower over time. There have been contradictions in the ECB’s stance; ECB chief Mario Draghi says at one point in time the ECB would do whatever it takes (to protect the euro), and at his latest press conference he said the central bank is done doing anything with respect to interest rates. Evidently, there’s a contradiction there and there’s a communications problem about what Draghi is really telling people, he noted.
Following Draghi’s statement, the euro strengthened – an outcome that the ECB surely had not hoped for. Similarly, the yen unexpectedly strengthened following the Bank of Japan’s policy announcement. Asked if the market’s losing confidence in the policy path of central banks, John said the markets are sensing that whatever the policy move is at the present time, it’s far less effective than what people might think otherwise, or what the central bankers themselves think.
Actively managed exchange-traded funds have failed to capture investors’ imagination in the US despite the overall ETF industry growing apace with assets under management crossing $2 trillion in 2015. Actively managed fixed income funds, however, have fared better by cornering two-thirds of the $24 billion overall active niche.
