Too much negativity seems to be priced-in. Based on our central scenario of a slowdown with no major global downturn and lower US real yields as inflation picks up, the hefty misalignments in some commodity FX with underlying fundamentals offer attractive opportunities.
Strong growth momentum, ongoing fiscal support, a tight labour market and mounting inflationary pressures all suggest that the Fed will deliver on its plan to further tighten monetary policy over the next few quarters. While a number of risks are worth monitoring, the determinant factors for US monetary policy will remain domestic inflation and employment.
For too long most professional investors operated on the basis that it really did not matter if the businesses they backed damaged the environment, or our health or our living standards. So-called externalities were the business of government to sort out. Investors’ responsibility was simply to evaluate whether shares were good or bad value on the basis of whatever financial metric they preferred or was fashionable. But the rise of populism, and the associated life-or-death challenge to economic liberalism, means that the prudent investor can no longer sit on the sidelines and ignore the benign and toxic spinoffs from corporate conduct. Sustainable investing means harnessing the power of capital to foster a sustainable society.
What will the children of today - the investors of tomorrow - want from their investments? The answer - an awful lot. The next generation look like they will be more socially and environmentally engaged than the last few. They know they are stakeholders in the future of the world rather than just shareholders in the world’s listed companies. So, while they are sure to still want to make financial returns from their cash, they are also likely to want to see good come from the way in which their money is invested. What kind of good? The answer to that is going to be different for every investor. That’s why the future of investment is a collaborative one. If the financial services industry wants to serve the next generation properly, it must spend less time assuming it knows what the young want and more time asking them what they want
It is the starkest warning of recent history. The world needs to make "rapid, far-reaching and unprecedented changes in all aspects of society" over the next decade in order to keep climate change at bay and limit the threat of a raft of natural disasters affecting millions of people.
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