With my colleagues Russ Brownback and Trevor Slaven, we contend that eight major #market influences are likely to dominate the #investment environment in the year ahead and that a proper #portfolio mix is instrumental to delivering a successful outcome: bit.ly/2U4sn3J
Over the next week we’ll be looking at these eight themes in more detail, beginning with the first two today: 1) The importance of aggregate global #liquidity and 2) the yawning supply/demand imbalance in #yielding global #assets.
In our view, changes to the level of aggregate global #liquidity is one of the most dominant, yet still underappreciated, influences in contemporary #macro analysis. Central #banks allowed liquidity to contract in 2018 and early-2019 but have pivoted sharply since then.
Surging global #liquidity intentionally creates a “crowding-out effect” that drives #capital to seek out greater #yield and return.
So, when central bank #asset purchases are combined with companies that are simply rolling existing #debt without adding to new borrowing, we think the net new supply of global #fixedincome assets is likely to be some $400 to $500 billion lower than last year.
And that’s at a time when the global #demographic trend of people heading into #retirement years is quite high, resulting in an intensifying bid for #yield!
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