Source: Unigestion, Bloomberg as of 26 November 2021.
One of the guiding principles of our investment process is that macroeconomic regimes determine asset returns over the medium term. It is therefore essential to monitor the macroeconomic context and its various dimensions (activity, inflation, monetary policy, sentiment, valuation, etc.) in real time in order to dissociate what stems from a fundamental change as opposed to noise.
Looking specifically at inflation, our proprietary Nowcasters, combined with a thorough analysis of the post-Covid supply chain – characterised by the absence of inventories and an overdependence on certain geographical areas and specific components – led us to identify very early on the risk of a « supply shock » as the most important factor for inflation in 2021. The fiscal stimulus, first used as precautionary savings and then as consumption, has added a “demand” effect to the initial “supply shock”, transforming the expected base effect on inflation in H1 2021 into a monumental inflation surprise. The magnitude of the shock is clearly visible in our chart, where the volatility of inflation has risen dramatically this year, to levels not seen since the 1974 oil shock.
Important Information
The information and data presented in this page may discuss general market activity or industry trends but is not intended to be relied upon as a forecast, research or investment advice. It is not a financial promotion and represents no offer, solicitation or recommendation of any kind, to invest in the strategies or in the investment vehicles it refers to. Some of the investment strategies described or alluded to herein may be construed as high risk and not readily realisable investments, which may experience substantial and sudden losses including total loss of investment.
The investment views, economic and market opinions or analysis expressed in this page present Unigestion’s judgement as at the date of publication without regard to the date on which you may access the information. There is no guarantee that these views and opinions expressed will be correct nor do they purport to be a complete description of the securities, markets and developments referred to in it. All information provided here is subject to change without notice. To the extent that this page contains statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties, including, but not limited to, the impact of competitive products, market acceptance risks and other risks.
Data and graphical information herein are for information only and may have been derived from third party sources. Although we believe that the information obtained from public and third party sources to be reliable, we have not independently verified it and we therefore cannot guarantee its accuracy or completeness. As a result, no representation or warranty, expressed or implied, is or will be made by Unigestion in this respect and no responsibility or liability is or will be accepted. Unless otherwise stated, source is Unigestion.
Past performance is not a guide to future performance. All investments contain risks, including total loss for the investor.
