Slow Growth Transitions

Slow transitions will likely lead to continued slow growth.

Slow transitions — pandemic to endemic; globalization to regionalization; and fossil fuels to renewables — mean investors must navigate a challenging global economy with high debt and unfavorable demographics.

Inflation Recalibration

Just as investors thought pandemic-related inflation would settle down, the war in Ukraine forced them to recalibrate.

Automation and digitization still produce powerful disinflationary forces, but they will likely need time to overcome recent supply shocks.

Monetary Drought

The monetary flood has evaporated, and investors must adjust for higher interest rates.

Investors must adjust for higher interest rates in their decision-making and no longer depend on central banks to rescue the economy.

Regional Rebuilding Blocs

Countries are rebuilding their economic and military security by limiting their dependence on imports.

Countries are rebuilding their economic and military security by limiting their dependence on imports such as energy and technology, especially from political adversaries. Investors will decide whether — or how best — to deglobalize their portfolios accordingly.

GREEN TRANSITION STILL A GO

A focus on national energy security and high fossil fuel prices creates potential investment opportunities for renewable energy.

Russia’s energy battle with Europe triggered a search for other sources — climate-friendly or not. While this may delay the green transition, the focus on national energy security and high fossil fuel prices creates potential investment opportunities for renewable energy.

Not So Negative

Higher interest rates bring investors closer to positive real after-inflation cash returns.

Higher interest rates — including a move out of negative territory for Europe and Japan — bring investors closer to positive real after-inflation cash returns. This is good for economic functioning and savers, but a risk for other investment returns.