Economics

Cracks are opening up in global economies around the world, with increasing unemployment a bellwether for softening conditions. A tipping point is on the horizon, but central banks remain wary.

Whether you perceive the RBA’s messaging to be balanced or mixed, the uncertainty serves as a reminder that fixed income is a vital sleeve in any investment portfolio.

It’s been one of the most disappointing regions in the world in terms of performance, but Pzena Investment Management thinks China’s bombed-out equity market presents “a real win opportunity”.

Indices are flush in developed markets the world over, but that doesn’t mean prices have necessarily peaked according to Invesco chief global market strategist Kristina Hooper.

The tailwinds for disinflation are starting to coalesce across the globe, which should give some central banks the ‘anchoring’ required to start dropping rates by the middle of the year.

It’s a narrow path to a ‘Goldilocks’ economic outcome with steep drops on either side. Any easing of inflation is likely to come with real market disruption, which should lead to more opportunity for skilled active managers to show their mettle.

Interest rates aren’t going back to what the current generation of investors consider ‘normal’ anytime soon, according to Oaktree’s Howard Marks, and different strategies will outperform in the years to come.

Understanding how macroeconomic changes may affect companies’ earnings profiles is key to Ausbil Investment Management’s top-down approach, which lets the fund manager invest with confidence in uncertain markets by focussing on the things it does know, says CIO Paul Xiradis.

Faced with the option of stunting ‘financial stability or growth stability’, the US will only go one way. So investors need to protect against more volatility and inflationary pressure, Alex Lennard warns. But at least it won’t be boring.

Stubborn inflation is forcing central banks around the world to recalibrate, according to Neuberger Berman. Shorter durations remain du jour while yields are strong, but hedging against monetary easing (especially in the US) could be savvy.

The aggressive sell off in US bonds has prompted many to speculate that interest rates have adjusted upwards on a structural basis. But Ninety One investment strategist Russell Silbertson takes a different view.

While Australian household wealth is hitting new records, research shows much of it is held by just a few people, with the richest 5 per cent of Australians seeing their assets grow in value by 86 per cent over the last 20 years.