Morgan Stanley IM: From Jackson Hole to the Rabbit Hole: Is a Recession in the Cards?
Podcast
Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer, Global Balanced Risk Control Team, shares his macro thematic views on key market drivers.
22.08.2023 | 08:14 Uhr
Up until now the Fed has focused on growth, and only worried about inflation.
But that was then and things may have flipped, where today they focus on inflation and only worry about growth.
The central bankers at Jackson Hole seem to be heading down Alice’s
proverbial “rabbit hole” and doing less to discourage a recession. But,
this may be the card they are playing.
The mandated inflation target could be viewed as Wonderland’s Queen
of Hearts, with the central bankers her playing cards and loyal
defenders.
Talking tough on inflation and keeping rates high until the job is
done will be part of their story. But reading between the lines is the
veiled threat of a mild recession.
In the end, what might a mild recession look like and what investment opportunities might it bring? We discuss.
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investment objective. Portfolios are subject to market risk, which is
the possibility that the market values of securities owned by the
portfolio will decline and that the value of portfolio shares may
therefore be less than what you paid for them. Market values can change
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crises, terrorism, conflicts and social unrest) that affect markets,
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timing, duration, and potential adverse effects (e.g. portfolio
liquidity) of events. Accordingly, you can lose money investing in this
portfolio. Please be aware that this strategy may be subject to certain
additional risks. There is the risk that the Adviser’s asset allocation methodologyand assumptions
regarding the Underlying Portfolios may be incorrect in light of actual
market conditions and the Portfolio may not achieve its investment
objective. Share prices also tend to be volatile and there is a
significant possibility of loss. The portfolio’s investments in commodity-linked notes
involve substantial risks, including risk of loss of a significant
portion of their principal value. In addition to commodity risk, they
may be subject to additional special risks, such as risk of loss of
interest and principal, lack of secondary market and risk of greater
volatility, that do not affect traditional equity and debt securities. Currency fluctuations could erase investment gains or add to investment losses. Fixed-income securities
are subject to the ability of an issuer to make timely principal and
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(interest-rate risk), the creditworthiness of the issuer and general
market liquidity (market risk). In a rising interest-rate environment,
bond prices may fall and may result in periods of volatility and
increased portfolio redemptions. In a declining interest-rate
environment, the portfolio may generate less income. Longer-term securities may be more sensitive to interest rate changes. Equity and foreign securities are generally more volatile than fixed income securities and are subject to currency, political, economic and market risks. Equity values fluctuate in response to activities specific to a company. Stocks of small-capitalization companies
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shares have many of the same risks as direct investments in common
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Supply and demand for ETFs and Investment Funds may not be correlated to
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potentially large negative impact on the portfolio’s performance. A currency forward is a hedging tool that does not involve any upfront payment. The use of leverage may increase volatility in the Portfolio.
IMPORTANT DISCLOSURES:
Past performance is no guarantee of future results.
The returns referred to in the audio are those of representative
indices and are not meant to depict the performance of a specific
investment.
There is no guarantee that any investment
strategy will work under all market conditions, and each investor should
evaluate their ability to invest for the long-term, especially during
periods of downturn in the market.
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