The (in)famous ex Chair of the US Federal Reserve, Alan Greenspan, was well known for talking a lot without saying much, a key skill when his public pronouncements often moved markets. He himself came up with the famous quote “if you understand what I’m saying then you aren’t listening carefully enough”. This is a phrase that could be used for today’s markets. If you think you know what is going to happen next, then you don’t really understand what is going on.
My anecdotal experience of inflation in the hospitality sector (a glass of wine and a pint of beer) got me thinking about how developed economies are placed for the present inflation challenge.
How we position our fixed income and cash funds to reflect their ESG, ethical and sustainability characteristics has been debated internally for several months. In light of the EU’s Sustainable Finance Disclosure Regulation, we have designated funds which fall under this regime as either Article 6, Article 8 or Article 9.
Inflation was again dominating headlines last week. On Wednesday UK CPI data for April showed annual inflation at 1.5%, in line with expectations. However, RPI at 2.9% was significantly above consensus; this was the largest gap between the two indices since November 2010.
The UN Sustainable Development Goals (SDGs) were launched in 2015 as part of the UN’s Sustainable Development Agenda. These were adopted by all UN member states as part of a common aim to end poverty, protect the planet and ensure that everyone could enjoy peace and prosperity.
Luck plays an important role in life. My colleague Azhar Hussain was talking to me about Biden’s 100 days and I reflected on a quote I heard on the radio last week: Boris Johnson has been lucky with his enemies. I think that could also apply to President Biden.
It sounded funny at first – a massive container ship stuck in the Suez Canal. The pictures were amazing, showing both the predicament and indeed the sheer size of modern cargo vessels. The reality though is that billions of dollars in trade was halted, shipping rates have soared, and oil prices have firmed.
March 2021 - A Covid-19 Sustainable investment update. What is happening? What will happen next? How are we performing?
Sustainable investing is traditionally an equity concept. Its history is largely devoid of fixed income. Yet that appears to be changing. The growing desire from clients for products that embed ethical values, alongside growing evidence that sustainable approaches do not compromise financial performance, has led to a surge in enthusiasm for sustainable approaches to investing across all asset classes. But is this all hype? Does it truly belong in the world of credit?
It is often said that market participants dislike uncertainty, but I think that the opposite is true. Investors thrive on weighing up options for outcomes and then backing their views. Making choices in a world of imperfect knowledge is what we all do.
Government bond yields continued to rise sharply over last week, although appeared to have stabilised towards the end, and equities moved back from their recent highs. All of this was met with some relief throughout global markets.
Government bonds were under pressure last week as inflation, vaccine news and supply fears weighed on markets. A key issue for me over the next few weeks will be whether this rise in the risk free rate impacts on risk assets such as credit and equities.
The separate articulation of Environmental, Social and Governance (ESG) investing started as an equity construct and much of the data and analysis used today is still centred in equities.
The magic money tree is alive.