Odd Lots Luke Kawa on the Macro Situation Right Now
Mar 22, 2021
Luke Kawa, an Asset Allocation Strategist at UBS Asset Management, delves into the current macroeconomic landscape shaped by vaccine rollouts and fiscal stimulus. He discusses the challenges of adapting traditional investment models like the 60-40 portfolio amid rising rates. Kawa also explores the expected economic growth driven by a recovering economy and highlights the significance of U.S. and Chinese bonds in investment strategies. The conversation touches on the impact of retail investors and the need for a global outlook in asset management.
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Bond Role
- Bonds still play a role in portfolios, but they hedge downside growth shocks, not all shocks.
- Underweight global duration now because bond yields haven't fully priced in the recovery.
Chinese Bonds
- Chinese bonds attract investors with yield premiums and economic maturity.
- Increased institutional adoption reinforces their negative correlation with stocks.
Fiscal Policy Impact
- The shift to fiscal policy may make cyclical earnings less cyclical.
- This could narrow the valuation gap between cyclical and defensive stocks.