This podcast episode focuses on the economic and business cycle, discussing the current state of the global economy, including the divergent growth patterns across regions and sectors. The experts also delve into economic outlook, investment strategies, and portfolio management, emphasizing the importance of a balanced approach and considering exogenous risks.
Takeaways
• The US economy is still relatively late cycle, characterized by low unemployment, strong growth, elevated profit margins, and low leverage.
• Inflation has normalized despite being late cycle, and risk premia are low, which is a concern.
• It is important to understand that being late cycle does not necessarily imply an imminent recession.
• Disinflation can impact consumer disposable income and financial conditions, but a clear evidence of a soft landing is needed before ruling out the possibility of a downturn.
• Monitoring consumer behavior, labor market dynamics, and sentiment cycles is important in facing potential recessionary risks.
• A balanced approach is crucial, maintaining exposure to equities and bonds while being prepared to adjust strategies based on changing economic conditions.
• Alternative assets can provide diversification, return generation, and access to unique investment opportunities, but challenges such as illiquidity and potential for higher volatility must be considered.
• Two major structural cycles to consider when making strategic asset allocation decisions are inflation volatility and productivity.
• Investing in companies that can benefit from productivity gains and technological advancements is important.
