Putnam Perspective - Rising interest rates are potential market challenge

Bob Ewing, Co-Head of U.S. Equities, talks about the impact of rising interest rates and offers his outlook for earnings growth in 2014. To receive videos fr...

One of the potential challenges we’re likely to face in ’14 is rising interest rates. We’re at a very low level. But if you look at interest rates and break it into a two-dimensional chart, so that you’ve got rising and falling on one axis and from high or low levels on another axis, the best quadrant on that two-dimensional chart is rising interest rates from low levels. And I think that’s likely to be the environment we’re in in ’14. That tends to characterize an environment where good news is good news and the economy is slowly improving. And that’s kind of the way I see things. The manifestation of that is likely to be strong, although I wouldn’t characterize them as being robust, earnings developments next year. I would expect S&P earnings growth to be high single digits. And the two of those together are likely to conspire for a very opportunistic environment, where, again, the capable support of the Putnam research organization should allow us to do good fundamental research.