In our 2022 Secular Outlook, “Reaching for Resilience,” we discuss these and other key trends affecting the global economy, markets, and fiscal and monetary policies that inform our five-year outlook and portfolio positioning. This blog post summarizes our views.
May’s soaring inflation coupled with inflation expectations was the catalyst for the 0.75% interest rate increase at the June Federal Reserve meeting, explained Fed Chair Jerome Powell in his testimony before
In this special report, Morningstar’s experts discuss how to think about inflation today, examine your own personal inflation rate, and safeguard against inflation’s corrosive effect on your investments. While some
Right now, we know that volatility is high, meaning that markets are very emotional. In the top half of the chart, the green background indicates a “bullish” (low risk) market environment; yellow is “transitional” (rising risk);
And then, for most people, we think of human capital, it’s often a little bit more bond like, than stock like, and we arrive at that conclusion by thinking about the nature of the cash flows of that saving series. So, has
The Fed is plainly hawkish and its plans to tighten monetary conditions via balance sheet reduction and rate hikes are included in their forward guidance. In addition, even if the U.S. economy manages to avoid a recession in 2023, earnings estimates are likely to be negatively revised
It is difficult to survive in the land of thematic funds. During the 15 years through Dec. 31, 2021, more than 80% of thematic funds worldwide closed their doors. Most thematic funds prove to be one-hit wonders or don’t live long enough to see their investment theses pan out. Timing is a crucial element for thematic funds, and merely staying open long enough to have their time in the limelight can be critical to their long-run viability.
The MSCI ACWI US Small Cap Growth Index declined over 10%, while its value counterpart was only down about 2.5%, highlighting the impact of increasing economic uncertainty from higher inflation and the war in Ukraine. Sector and geographic allocations are supplemental information
Firms must adapt to secular and cyclical headwinds.
Recessions come in many different varieties, and if a recession does occur, we think it will be relatively short and mild. In order to tame high inflation in this scenario, the Fed would be forced to raise interest rates
Waves in commodity prices, consumer inflation, equity and bond yields, stock market booms and busts, and innovation disruptions appear to occur even against a background of high and steady technological
Two issues that pop out most frequently are: (1) share of inflation that can be attributed to global factors (=whether central banks can address price pressures without slowing the economy too much); and (2) coordination between monetary and fiscal policies (=growth/inflation
While markets have been falling across the board in 2022, low-volatility indexes and funds have generally held up better than their counterparts.
However, I personally think the outlook for emerging market debt is still uncertain and is highly dependent on future inflation and on what the Fed is likely to do about it. The iShares J.P. Morgan USD Emerging Markets
