Text on screen: PIMCO
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Text on screen: Geraldine Sundstrom, Portfolio Manager, Asset Allocation
Geraldine Sundstrom: We hear a lot of stories about we are early in the recovery in the cycle, and the recipe book is telling you to buy value. We would caution on this. PIMCO has pointed in its secular outlook that we are in an era of disruption and a lot of things are changing. Things that were already on the move before the pandemic got accelerated by the pandemic.
Text on screen: Secular disruptors.
Text on screen: Erin Browne, Portfolio Manager, Asset Allocation
Erin Browne: The first was technological disruption, and certainly over the last few months we've seen traditional working patterns and office environments really be upended from the work-from-home environment.
Text on screen: Secular Disruptors, BULLET – 1. Technology, 2. Populism, 3. Environmental concerns, 4. Monetization of fiscal deficits
Secondarily, populism. And certainly with the COVID crisis exacerbating income inequality and disparity across many of the developing countries – and developed world, as well.
Third is environmental concerns. And certainly over the last few months there has been a particular focus on the integrity of the food supply in emerging markets.
And then, lastly, we've seen a real push towards monetization of fiscal deficits.
Now, all of these structural impacts are really set against an environment where we expect that the global growth backdrop over the next couple of years is going to be very low, and we do think that central banks will respond very cautiously.
Images of Erin Browne and Geraldine Sundstrom
In terms of the market impact, we really would distinguish between the short-term dislocations that we saw emerge in the first and second quarters this year versus the longer-term, more structural impacts to the market.
We're more keen to like those investments where we think that there's short-term dislocations, where the liquidity provisions put in place will continue to heal those assets and continue to allow those assets to return to fair value, versus where we think there's a real impediment given the solvency risks that have emerged.
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Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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