Every cycle is slightly different. What I think will be slightly different this time is the Fed is starting to raise interest rates as the global economy was already slowing.
In the past, the Fed was raising interest rates as the global economy was still accelerating, but because of Covid it got delayed.
So this time is slightly different. I just repeat that. This time is slightly different in that the Fed hasn’t even started raising rates – it’s talking about them. Actually, if you look at GDP growth rates, they’re beginning to slow and inflation rates are probably peaking.
So it will be very volatile. It’ll be a very volatile time for financial assets. It always is as you look in history when interest rates go up. And it’ll be slightly different from previous playbooks because the timing and the sequencing is slightly different.
The potential is for a big bear market. It’s a low probability potential at the moment, but every day the probabilities of that are drifting up.
And of course the disaster in Ukraine probably increases that risk.
The bullish potential is that actually this is a normal mid-cycle correction. [But] it’s too early to tell at the moment whether this is a normal, mid-cycle correction.
Pendal Global Select Fund
Awarded researcher Zenith’s highest rating of highly recommended*
Chris Lees co-manages Pendal Global Select Fund with Nudgem Richyal. The pair have been working together in global equities investing for more than 20 years.
Chris has more than 32 years of investment industry experience. He joined Pendal Group’s UK-based asset manager J O Hambro Capital Management (JOHCM) in 2008 after spending 19 years at Baring Asset Management, ultimately as head of its global sector team.
Pendal Global Select Fund is a global equities portfolio with a distinctive, yet proven approach and a 17-year track record of outperformance. Since its inception, the underlying strategy (JOHCM Global Select Fund) has delivered top-decile performance in Lipper and 2nd decile in Morningstar.*
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