Presentation on Lorem Ipsum to: ABC Company Date

Report
PUTTING MARKETS IN PERSPECTIVE | 1Q15
Introduction
PIMCO’s process
Cyclical insights
Economy
Global
U.S.
Europe
Japan
Emerging markets
Financial markets
Credit
Equities
Treasuries
Benchmarks
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PIMCO’s Cyclical Forums: Reading the road
PIMCO’s Cyclical
Forums take place
three times a year and
distill extensive analysis
into the market views
highlighted in this
presentation.
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Among the major economies, the biggest beneficiaries
from a decline in oil prices are expected to be Japan,
the eurozone, China, India and the U.S.
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Global economy
PIMCO expects
global growth to
accelerate in 2015,
from around 2.5%
to 3.0%.
PUTTING MARKETS IN PERSPECTIVE | 1Q15
ECONOMY
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Global inflation will remain relatively low into early 2015
Source: Bloomberg. Data through 31 October 2014 for Japan, all other data through 30 November 2014. *Tax-adjusted inflation.
Inflation is shown as CPI: the Consumer Price Index, which tracks a weighted average of prices for goods and services.
PUTTING MARKETS IN PERSPECTIVE | 1Q15
ECONOMY
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Declines in oil prices will support higher economic growth
Source: Bloomberg, PIMCO. Forecast is for four quarters ending Q4 2015. World is a weighted average sum of countries listed in chart
above. BRIM is Brazil, Russia, India and Mexico.
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ECONOMY
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U.S. economy
PIMCO has become
slightly more
optimistic about
the U.S. economy,
expecting real GDP
growth of 2.75%–
3.25% in 2015.
PUTTING MARKETS IN PERSPECTIVE | 1Q15
ECONOMY
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U.S. employment picture continues to improve
Source: Bloomberg. Data through 31 December 2014. Change in employment is U.S. employees on nonfarm payrolls total, month over
month, seasonally adjusted.
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ECONOMY
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Drop in oil prices boosts disposable income
Source: U.S. Energy Information Administration. Data through 2015 (projected 2013–2015).
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ECONOMY
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European
economy
We continue to
focus on the ability
of the ECB to
deliver, forecasting
similar slow growth
of 0.75%–1.25%
this year.
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ECONOMY
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Economic stagnation continues despite ECB stimulus
Source: Bloomberg. Data through 30 November 2014.
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ECONOMY
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Relative growth outcomes highlight importance of
structural reform
Source: Eurostat. Data through 30 September 2014.
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ECONOMY
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Japanese
economy
Central bank
support and falling
oil prices will
contribute to
Japan’s economic
recovery, leading
PIMCO to forecast
2015 growth of
1.25%–1.75%.
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ECONOMY
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April’s tax hike caused a larger-than-expected reaction
Source: Bloomberg. Data as of December 2014.
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ECONOMY
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BOJ is willing to take aggressive steps to support growth
Source: Bloomberg. Data through 30 September 2014. PIMCO projections from October 2014 through December 2015.
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ECONOMY
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Emerging
markets
PIMCO is
forecasting slower
EM growth in
2015, with China
growing 6.0%–7.0%
and the BRIM
countries growing
1.5%–2.5%.
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ECONOMY
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China’s economic growth falls below 2014 target of 7.5%
Source: CEIC, Bloomberg, NBS. Data through Q3 2014, projections through Q3 2015.
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ECONOMY
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Growth dynamics will differ for net consumers and net
producers of energy
Source: Haver Analytics, PIMCO. Data as of January 2015.
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ECONOMY
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Economy
Key topics
PIMCO’s outlook
Implications
Global
Growth to accelerate to 3.0% in 2015
Differentiated conditions will
create select opportunities.
U.S.
Slightly more optimistic, forecasting
real growth of 2.75%–3.25%
Seek opportunities in nonagency mortgages and select
investment grade and high yield
corporate issues.
European
Similar slow growth of 0.75%–1.25%
Be cautious, but consider
opportunities in peripheral bonds
and potential equity markets in
select countries.
Japan
Central bank support and falling oil
prices will contribute to growth of
1.25%–1.75%
Remain cautious about the
effectiveness of BOJ policy to
deliver on what are now high
market expectations.
Emerging markets
Expecting China growth of 6.0%–7.0%
and BRIM growth of 1.5%–2.5%
Volatility is likely to stay elevated
so investors should maintain a
long-term perspective.
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ECONOMY
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Credit
Falling oil prices
have created
opportunities in
certain high yield
bond sectors,
including
transportation
and leisure.
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FINANCIAL MARKETS
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Energy sector significantly underperformed
Source: BofA ML U.S. High Yield Index. Data as of 31 December 2014.
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FINANCIAL MARKETS
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Some sectors should benefit from lower energy prices
Source: BofA ML U.S. High Yield Index. Data as of 31 December 2014.
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FINANCIAL MARKETS
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Equities
Return opportunities
in equities may be
greater in regions
outside the U.S.
in 2015.
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FINANCIAL MARKETS
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European earnings have not yet recovered
Source: European earnings per share (EPS) is MSCI Europe Index. U.S. EPS is MSCI USA Index. Data through 31 December 2014.
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FINANCIAL MARKETS
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European stocks are offering an attractive risk premium
Source: Morgan Stanley. Data through 31 December 2014.
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FINANCIAL MARKETS
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Treasuries
PIMCO expects the
Fed to gradually raise
policy interest rates
in mid-2015.
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FINANCIAL MARKETS
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Flight to quality drives U.S. 10 year down
Source: Bloomberg. Data through 31 December 2014.
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FINANCIAL MARKETS
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Short-term yields reflect market expectations
Source: Bloomberg. Data through 31 December 2014.
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FINANCIAL MARKETS
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Benchmarks
Active bond
management is
often associated
with the opportunity
to outperform the
benchmark, but
equally important
today is the
potential to
mitigate risk.
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FINANCIAL MARKETS
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BAGG does not represent total bond market
Source: Barclays, PIMCO. Data as of 30 November 2014.
*Government-related debt includes agency, local authority and U.S. dollar-denominated sovereign and supranational debt, from both
developed and emerging markets.
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FINANCIAL MARKETS
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Duration has increased while yields have fallen
Source: Barclays, PIMCO. Data as of 30 November 2014.
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FINANCIAL MARKETS
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Financial
markets
Key topics
PIMCO’s outlook
Implications
Credit
Falling oil prices have created
high yield opportunities in select
sectors
Investors comfortable with the
higher risks associated with high
yield bonds should focus on
fundamentals.
Equities
Non-U.S. markets may offer more
attractive opportunities
Consider increasing non-U.S.
equity exposure.
Treasuries
Fed will gradually raise policy
interest rates in mid-2015
Long-term U.S. Treasury yields
will likely move higher so
investors may want to consider
non-U.S. sovereigns.
Benchmarks
Government policy and direct
issuance of Treasuries have
resulted in more concentrated risk
in the BAGG
Favor an actively managed bond
fund that seeks to mitigate risk
and generate higher returns.
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FINANCIAL MARKETS
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Any questions?
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Appendix
Past performance is not a guarantee or a reliable indicator of future results.
FORECAST
Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as
an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an
actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not
be construed as an estimate or promise of results that a client portfolio may achieve.
HYPOTHETICAL EXAMPLE
Hypothetical and simulated examples have many inherent limitations and are generally prepared with the benefit of hindsight. There are frequently sharp
differences between simulated results and the actual results. There are numerous factors related to the markets in general or the implementation of any
specific investment strategy, which cannot be fully accounted for in the preparation of simulated results, and all of which can adversely affect actual
results. No guarantee is being made that the stated results will be achieved.
INVESTMENT STRATEGY
There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors, and each investor should
evaluate their ability to invest long-term, especially during periods of downturn in the market.
OUTLOOK
Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee
that these investment strategies will work under all market conditions or are suitable for all investors, and each investor should evaluate their ability to
invest for the long-term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
RISK
Investing in the bond market is subject to certain risks, including market, interest rate, issuer, credit and inflation risk; investments may be worth more or
less than the original cost when redeemed. Bank loans are often less liquid than other types of debt instruments. High yield, lower-rated securities
involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios
that do not. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations and economic and
political risks, which may be enhanced in emerging markets. Commodities contain heightened risk, including market, political, regulatory and natural
conditions, and may not be suitable for all investors. Diversification does not ensure against loss. There is no guarantee that these investment strategies
will work under all market conditions or are suitable for all investors, and each investor should evaluate their ability to invest long-term, especially during
periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.
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Appendix
Index definitions:
• Barclays U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate
bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are
subdivided into more specific indices that are calculated and reported on a regular basis. It is not possible to invest directly in an un-managed index.
• The BofA Merrill Lynch High Yield Index is an un-managed index consisting of bonds that are issued in U.S. Domestic markets with at least one year remaining until
maturity. All bonds must have a credit rating below investment grade but not in default.
• The MSCI Europe Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets
in Europe.
• The Morgan Stanley Capital International (“MSCI”) U.S. Index is a market capitalization weighted index composed of approximately 325 issues, and is generally
representative of the market structure of the United States.
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This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for
informational purposes only. Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be
considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been
obtained from sources believed to be reliable, but not guaranteed.
PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. | Pacific
Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the United States Securities and Exchange Commission. |
PIMCO Investments LLC, U.S. distributor, 1633 Broadway, New York, NY, 10019 is a company of PIMCO. | PIMCO Europe Ltd (Company No. 2604517), PIMCO Europe, Ltd
Amsterdam Branch (Company No. 24319743), and PIMCO Europe Ltd - Italy (Company No. 07533910969) are authorized and regulated by the Financial Conduct Authority
(25 The North Colonnade, Canary Wharf, London E14 5HS) in the UK. The Amsterdam and Italy Branches are additionally regulated by the AFM and CONSOB in accordance
with Article 27 of the Italian Consolidated Financial Act, respectively. PIMCO Europe Ltd services and products are available only to professional clients as defined in the
Financial Conduct Authority’s Handbook and are not available to individual investors, who should not rely on this communication. | PIMCO Deutschland GmbH (Company
No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany) is authorized and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28,
60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The services and products provided by PIMCO Deutschland GmbH
are available only to professional clients as defined in Section 31a para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should
not rely on this communication. | PIMCO Asia Pte Ltd (501 Orchard Road #09-03, Wheelock Place, Singapore 238880, Registration No. 199804652K) is regulated by the
Monetary Authority of Singapore as a holder of a capital markets services license and an exempt financial adviser. The asset management services and investment products
are not available to persons where provision of such services and products is unauthorized. | PIMCO Asia Limited (Suite 2201, 22nd Floor, Two International Finance Centre,
No. 8 Finance Street, Central, Hong Kong) is licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures
Ordinance. The asset management services and investment products are not available to persons where provision of such services and products is unauthorized. | PIMCO
Australia Pty Ltd (Level 19, 363 George Street, Sydney, NSW 2000, Australia), AFSL 246862 and ABN 54084280508, offers services to wholesale clients as defined in the
Corporations Act 2001. | PIMCO Japan Ltd (Toranomon Towers Office 18F, 4-1-28, Toranomon, Minato-ku, Tokyo, Japan 105-0001) Financial Instruments Business
Registration Number is Director of Kanto Local Finance Bureau (Financial Instruments Firm) No.382. PIMCO Japan Ltd is a member of Japan Investment Advisers Association
and The Investment Trusts Association, Japan. Investment management products and services offered by PIMCO Japan Ltd are offered only to persons within its respective
jurisdiction, and are not available to persons where provision of such products or services is unauthorized. Valuations of assets will fluctuate based upon prices of securities
and values of derivative transactions in the portfolio, market conditions, interest rates and credit risk, among others. Investments in foreign currency-denominated assets will
be affected by foreign exchange rates. There is no guarantee that the principal amount of the investment will be preserved, or that a certain return will be realized; the
investment could suffer a loss. All profits and losses incur to the investor. The amounts, maximum amounts and calculation methodologies of each type of fee and expense
and their total amounts will vary depending on the investment strategy, the status of investment performance, period of management and outstanding balance of assets,
and thus such fees and expenses cannot be set forth herein. | PIMCO Canada Corp. (199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L
1G2) services and products may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose. | PIMCO Latin America
Edifício Internacional Rio Praia do Flamengo, 154 1o andar, Rio de Janeiro – RJ Brasil 22210-906. | No part of this publication may be reproduced in any form, or referred to
in any other publication, without express written permission. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset
Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world. © 2015 PIMCO
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