In this short video, Nick considers three key questions: Will economies face a hard, soft, no landing or something else? When will inflation and interest rates fall? What does this mean for private market investors?
- “Bumpy” economic landings ahead
- Deep recessions are likely to be avoided
- Wide performance dispersion at country, sector and company level
- Consumer discretionary, heavy industry and other cyclical sectors most at risk
- Companies in less cyclical sectors with structural tailwinds to outperform
- The price of more resilient growth is continued elevated inflation, and interest rates having to stay higher for longer
- Asset allocation implications
Global growth is slowing – geopolitical issues add to downside risks
Purchasing manager surveys show growth is losing steam across most major economies.
Core inflation is falling, but only gradually . . .
. . . keeping policy rates and bond yields “higher for longer”
Banks continue to retrench – boosting demand for alternative capital
Banks have substantially tightened lending standards.