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The Fed Cures Bird Flu
**FED HIKES 75BPS, INITIATES QT, TARGETS FOOD INFLATION. FED CURES BIRD FLU, LIFTS FOOD EXPORT RESTRICTIONS IN FOREIGN COUNTRIES, SHIFTS WATER TABLE FROM FLOODED FARM AREAS TO DROUGHT AREAS, RELEASES WHEAT FROM STRATEGIC GRAIN RESERVE, INCREASES BABY FORMULA PRODUCTION.
Finding Opportunities Amid Policy-Driven Volatility
There’s been no shortage of volatility so far this year as building inflationary pressures and increasingly tighter monetary conditions have led to spikes in volatility across interest rates and risk assets. Across credit markets, de-risking has become more common as investors price in their expectations for higher policy rates and the potential impact on global growth. Uncertainty continues to drive price action in the near term, but through the noise, growing pockets of value are emerging across the high yield landscape.
Where We Are Finding Growth: Renewable Energy Economy
The team believes the world is in the early stages of a meaningful mix shift from hydrocarbon-based energy to renewables-powered energy enabled by improving economics, social awareness and increasing regulatory pressures. These dynamics have enabled the team to uncover several profit cycle opportunities globally.
Where We Are Finding Growth: Industrial Process Innovation
A relatively slower capital expenditure cycle is often cited as one factor behind the past decade’s tepid expansion in many developed markets. However, we believe this top-down point of view obscures a healthy, albeit different, sort of capex cycle—one that is more technology-driven and focused on efficiency and margin improvements.
Where We Are Finding Growth: Health Care Innovation
In the six-plus decades since Francis Crick and James Watson published their short but revelatory article about DNA’s double-helix structure, ongoing research has accelerated understanding of human genetics.
Smarter Buildings—An Unsung Hero in the Climate Fight
The increasing evidence that greenhouse gases created by human activity is driving climate change—including higher temperatures, more droughts, extreme weather and melting glaciers—has created a call to action for public and private-market solutions to slow these trends.Read More
Evergrande: Maybe Not a Lehman Moment but Risks Are Real
As one of China’s largest property developers, Evergrande’s size and precarious financial position pose real risks for China’s authorities, economy and financial markets.
Are You Getting the Right Non-US Exposure?
Tepid economic growth in the post financial crisis decade left investors searching for companies that could stand out from the market by disproportionately growing their profits. The technology-centric US economy became the preferred destination for capital, with profit growth far exceeding its non-US peers (Exhibit 1). This rise in profits combined with more multiple expansion drove US equities to deliver over 600bps of higher annual returns and higher returns on equity (Exhibit 1). That said, it might be appropriate for investors to sharpen their pencils and give their non-US equity exposure a closer look given the price being paid for US profit growth appears a bit stretched today, and past performance is not indicative of future results (Exhibit 2).
Revisiting Bond vs Loan Relative Value
Opportunities to capture additional yield by moving up in quality are uncommon for fixed income investors, but that’s the dynamic at play today in leveraged credit.
Latin America’s Pandemic Election Cycle
Featured Author: Meagan Nace
Meagan Nace is an analyst on the Artisan Partners Sustainable Emerging Markets Team.
In addition to the public health tragedy, the pandemic has been a source of significant economic and fiscal setbacks for Latin America—at a time when social discontent over inequality was already beginning to surface. While we see some signs of economic improvement, the pandemic led to drops in much-needed investment—foreign, corporate and government—while fiscal conditions have become further strained. Now, a series of elections will reveal what leaders and policies each country feels will help it move forward—with potentially significant implications for the region’s financial markets.