Chinas government just announced it would take a big step back...and let its economy take a giant leap forward. We believe Chinas proposed economic reforms will transform the economy and should allay investors main concerns about Chinese markets. In Janus latest Equity Monthly, our equity team offers its perspective on Chinas Great Leap.

Cloud computing and social media are bringing a level of disruption and innovation not seen in the technology sector since the dot-com era. The troubling aspect is that valuations for many of these companies seem just as stretched as Internet stocks were back then. We think investors may be paying too much for the growth inherent in these companies.

This is not a story about getting back on the horse that throws you. It is about just staying on the horse. It is also a market story.

Over the past few years, investors have flocked to high-yield credit, many believing it a good way to mitigate their interest rate risk as well as capture additional yield. However, they may not realize the level of rate risk that has followed them. High-yield indices, negatively correlated to five-year Treasury bond yields over the past 15 years, have been positively correlated for the past year.

We think now is a good time to be investing in Europe. European equity valuations are at the lowest level in more than 40 years, by some measures, and we are seeing green shoots in the regions downtrodden economy. Meanwhile, European companies in several industries have right-sized their cost structures or refocused their businesses, setting them up to be more competitive on a global scale.

The U.S. oil and gas boom largely underpinned the countrys economic recovery, but this is only the beginning. Dont underestimate what cheap oil and natural gas means for the U.S. economy, or how long this advantage could last.

While the prospect of rising interest rates generally strikes fear into the hearts of fixed income investors, its important to remember that periods of rising rates are normal and can create opportunities for active bond managers. Since 1970 there have been 21 periods in which interest rates rose significantly. While each has had its own unique characteristics, over the past 20 years equities have rallied during these periods, which has tended to support corporate credit markets.

In recent years, the U.S. dollar has tended to lose value when the global economy improves, as investors are more willing to take risks. We believe that pattern has changed and that the U.S. dollar will outperform the Japanese yen, the euro and the British pound over the medium term, even if the global economy continues to improve. In our view, current conditions justify a material deviation in currency exposure compared with certain global fixed income benchmarks, such as the Barclays Global Aggregate Bond Index.

Janus Balanced Fund Portfolio Manager Marc Pinto discusses how he and Co-Manager Gibson Smith alter the amount of equity and fixed income in the portfolio based on market conditions.

Emerging market equities are lagging developed markets this year. However, the underperformance creates an opportunity in our view, and does little to change our long-term outlook for emerging markets, where we believe some of the strongest growth opportunities lie.

Janus Balanced Fund Portfolio Manager Marc Pinto discusses how he and Co-Manager Gibson Smith alter the amount of equity and fixed income in the portfolio based on market conditions.

In today's ever-shifting economic landscape, many investors are looking for a cautious approach. Marc Pinto answers five questions on Janus Balanced Fund, including how he navigates uncertain markets, where he's seeing compelling investment opportunities, and why the partnership between Janus' equity and fixed income teams may benefit investors.

Are we normal? For many quarters, I have counseled investors that we are going through extreme market conditions and that patience was the best strategy. As the panic fades in the rear-view mirror and the road ahead looks less bumpy, I stand by the advice. But I dont need to repeat it.

The Dow Jones Industrial Average closed at a new record high the first week of March, breaking its previous closing high reached in October of 2007. The new record is symbolic more than anything else, but it still has some positive implications for equity markets.

In Japan, a little inflation could go quite a long way. After stepping down six years ago, Prime Minister Shinzo Abe returned in November with a platform promising to put an end to the deflationary cycles that have plagued Japan for decades.

Asia's handset market is developing quite differently than in Europe or the U.S., creating an entirely different playing field for Apple and other handset makers. Major brands are being challenged by the rise of cheap, but very capable generic smartphones. If major brands cannot innovate above and beyond the new offerings of these emerging cheap smartphones, they will not be able to command the high prices, and corresponding high profit margins, that have underpinned their success.

As we enter 2013, we felt it would be an appropriate time to revisit one of last years most controversial predictions of future equity performance. We acknowledge that equities in general may not continue to deliver the same real rate of return they have over the last century; however, we believe the glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross' pessimistic prediction.

The glum outlook for the asset class forecasted by Bill Gross last year misses the mark. Our estimates of future equity returnsbased on three different approachesall point to a meaningfully higher forecast than Gross pessimistic prediction.

I manage investment professionals for a living. When an analyst gives me the positives on one hand and the negatives on the other hand, but offers no conclusion, I want to cut one of those hands off. The best analysts understand all the issues but come to well-founded views.

The U.S. Congress and President Barack Obama have patched together a deal that avoided the January 1 fiscal cliff. However, Washington has postponed a full resolution of fiscal and tax issues, creating continued uncertainty that can be expected to weigh on business and consumer spending and potentially keep U.S. gross domestic product growth below 2% in 2013.

As negotiations over the fiscal cliff go down to the wire, potential tax hikes and spending cuts threaten a number of industries. Our sector analysts share their insights on the key issues facing the industries they cover. While we are monitoring the fiscal cliff's impact on sectors and individual companies, our portfolio managers are not making major changes based on unpredictable political outcomes.

Rising fuel costs grounded airline stocks for much of the last two decades, but we think those costs were the impetus for significant structural changes that have positioned them to take off.

U.S. President Barack Obama has been re-elected for another four years, while Democrats will continue to control the Senate and Republicans the House of Representatives. We believe this outcome was largely anticipated by the markets before Election Day. However, U.S. Treasury markets likely will gain and risk assets could decline as investors remain concerned about sluggish economic growth, the impact of the impending "fiscal cliff" and the effects of continued Federal Reserve (Fed) intervention.

Economic headwinds loom on the horizon as we approach 2013, including a sovereign debt crisis in Europe and pending fiscal cliff in the U.S., but we think you can cross China off your list of worries. Economic data pointing to a slowdown in China has troubled investors. Many even question the reliability of that data, and suggest things could be worse than reported.

A recent case offers several lessons for Plan Sponsors and Service Providers. One of the most critical issues in the case was the failure of the company to follow its own Investment Policy Statement. This case illustrates the need for plans to create a proper process for Fiduciary Risk Management - emphasizing the Investment Policy Statement as the foundation for a prudent process.

The relationship between domestic securities market returns and U.S. Presidential elections is a favored topic of Wall Street commentators. As the 2012 Presidential election heads toward the tape, the pundits are in full swing once again, and claims about the impact of a Democratic or Republican victory on U.S. stock and bond markets pop up almost as frequently as political ads. In this paper, we address the question, Should investors take these prognostications to heart and, more importantly, apply them to their asset allocations?

"I skate to where the puck is going, not where its been." Wayne Gretzky. Many investors would love to be as successful as The Great One when it comes to their portfolios. Yet investors are often heavily influenced by the past, losing sight of where they need to be going. This seems to be especially true today: mistrust of equities is running high after a decade of disappointing returns and excessive volatility.

Ramifications of this summer's once-in-a-generation drought in the United States stretch much farther than Midwestern farms. The drought's impact will be felt most in emerging markets, and how leaders in those countries choose to interpret higher food prices in the context of overall inflation will merit close watching in the next 12 months. While rising food prices will pinch consumer budgets and wreak havoc on input costs for food service companies, we also see some investment opportunities tied to the drought.

We believe the Fed will take additional action by mid-September to stimulate the economy, probably through a third round of quantitative easing. U.S. economic growth remains well below potential and is slowing, and the Fed is not meeting its dual mandate to ensure price stability and full employment. We recently reduced our 2012 GDP growth estimate to between 1.5% and 1.7%.