NEW YORK-"We are not in a death spiral, like we were in 2008 with Lehman Brothers," maintained Scott Migliori, U.S. chief investment officer of RCM, an asset management firm that is a member of Allianz Global Investors.

Migliori and other RCM chief investment officers maintain that the barrage of negative news in recent months has been entirely overdone and has needlessly set in panic among investors and corporations alike. They spoke on "Risks and Opportunities in Volatile Global Markets" in a presentation at RCM headquarters here.

Instead of doom, RCM investment executives expect muted but steady economic growth in the U.S. and the rest of the world and equity prices to rebound slightly over the next year.

For now, they optimistically point to a number of investment opportunities, namely:

* Sustainability and currency investing in emerging markets

* Technology investing in the U.S.

* Income-focused strategies and dividends

"Over the last several weeks, a panic mentality has set in," Migliori said. "Fear of the unknown is driving the market."

While the possibility of a double-dip recession still remains, "in most economies, data is consistent with a soft patch only, rather than a hard landing," added Andreas Utermann, RCM global CIO.

"Indeed, we only anticipate a moderation in economic activity, rather than a double-dip," Utermann said, stressing, "I do not believe the U.S. will go bust in my lifetime-not because of the deficit but because the U.S. dollar is still the reserve currency of the world."

"Redemption" of the U.S. economy is possible, he added.

What will trigger an improvement?

RCM expects corporate spending to pick up as a result of "a rebound in various macro data points in the coming months."

As a result, after being downgraded in the first and second quarters of 2011, U.S. GDP should improve in the third quarter.

"What has held corporate spending back has been discussion of negative events, which derailed capital spending plans and has led to where we are today," Utermann said. "To trigger a sustained recovery and provide confidence in risk assets, fears of a double-dip must fully subside, growth must return to normal levels, and there must be confidence that deficits will be reduced."

If the tide begins to turn, investments will produce employment growth in 2012, which will provide additional support all of these underlying pillars, Utermann said.

However, RCM also believes investors must brace for what PIMCO co-CIO Bill Gross has termed the "new normal" of 3% returns on Treasuries and stocks.

"Beyond this temporary boost to capital spending and oil price relief, we do not see the basis for a continued reacceleration of U.S. real GDP growth into 2012," Migliori said. "Rather, we now believe the U.S. economy is on a muddle-through, sub-par growth trend."


Emerging Growth

This is why RCM is putting so much faith in emerging markets.

"A combination of still-high growth rates in emerging markets, negative real interest rates and high cash positions on companies' balance sheets lead us to a more constructive growth outlook," according to Stefan Hofrichter, head of the RCM global economics and strategy group.

A unique way to play emerging markets, and a clear, developing trend in those nations, is sustainability investing, which takes both environmental and socioeconomic factors into consideration, Utermann said.

"This is not just about ecological trends or the environment, but governance and proxy voting and shareholder engagement," Uterman said. "Companies in emerging markets will have to demonstrate they are taking shareholder issues seriously. Sustainability will become important in emerging markets and will lead to appreciation."

In addition, RCM believes that currencies in emerging markets are undervalued, said Raymond Chan, RCM CIO of the Asia Pacific region.

Thus, if emerging markets are poised to continue as a driver of the global economy, and U.S. manufacturing has moved to Asia because of lower costs, what is the U.S. competitive advantage? Migliori asked.

"The U.S. has continued to be a leader in innovation and cutting-edge technology," he said. Just look at its invention of the Internet and the powerhouse companies that followed-Netscape, Google, Amazon, eBay, Yahoo!, Apple and Facebook, Migliori said.


High Tech

These forward-looking companies are creating tremendous demand in other parts of the world, especially emerging markets, he noted.

In addition, there have been a number of high-profile initial public offerings of technology companies in recent months, and the pipeline remains robust, added Sebastian Thomas, RCM U.S. technology sector head. Companies such as LinkedIn, Pandora, Home Away and Fusion IO have seen shares initially rise more than 40% after their IPOs, Thomas said.

"Technology will be a secular growth trend in the U.S., but we are dealing with cyclical headwinds," Migliori admitted.

"I see a lot of parallels to 1998, when there was the Asian contagion of currencies, especially Thailand," Migliori said. "The crisis ultimately led to the collapse of Long-Term Capital Management and marked the market's bottom. At that time there were fears of a global recession, but the U.S. managed to avoid that scenario. Now we have a sovereign debt concern."

The key to solving this problem, Migliori believes, is "better coordination between the Federal Reserve and European Central Bank on stabilizing European contagion."

Thus, because these are "still challenging times," RCM is recommending investors reach for income-focused strategies and dividend-paying stocks, Utermann said.

"Forty to 60% of market returns in the past four years have been due to dividends," he said. "There's definitely been a shift away from share repurchases. Companies are now trying to differentiate themselves through dividend policies."

In sum, the RCM chief investment officers said it is important to sift through all of the negative indicators-most notably, equity prices. As Migliori joked, "The stock market has predicted nine out of the past five recessions.

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