1204 days ago
Inflationary risk is on the rise assuming economic recovery post covid-era. Warning for fixed income assets and growth firms. Nominal GDP growth for 2021 in the US is predicted at about 6% and 5% for Europe by Analysts and Economists. Growth firms hindered by inflation in terms of valuation, see dividend discount models for a refresher on equity valuation, and notice how increasing rates in the denominator diminish present values of price.
1205 days ago
ESG has staying power. Biden administration bolsters odds for climate friendly firms to succeed with new legislation in the pipeline for the next presidential administration. BlackRock has been the most prolific adopter this year excluding fossil-fuel, tobacco and weapons industries from their new ETFs. Part of this trend is of course related to returns. A BlackRock survey of 425 managers suggests plans to double down on their sustainable AUM to over one third of their portfolios by 2025.
1205 days ago
Assuming real interest rates are more likely to increase than decrease we expect a weak long-term bonds investment. If real interest rates rise due to faster growth and investment then strong corporate earnings might offset the impact of the higher real interest rates on stock prices. If savings rates were to dip however then there would be no such offset, and stock prices would then become overvalued.
1205 days ago
Valuations are only as good as today 5% of the time....
1205 days ago
According to CLSA, with the dollar weakening and global liquidity being in excess, the fundamental story for Emerging Markets equities is strengthening.
