After a multi-decade slumber, inflation has been dominating the economic and financial zeitgeist over the last twelve months. The sustained sell-off in both US stocks and bonds at the start of 2022 was an unfamiliar sight to investors that grew accustomed to the negative correlation that created the once mighty 60/40 portfolio. Are we entering a new paradigm where inflation has both higher mean and variance? Adam, Mike and Rodrigo lay out their views for navigating inflationary times, including topics such as:
- The difference between sustained and volatile inflation
- Large supply and demand mismatch, combined with a reversal of globalization gains of recent decades
- The huge difference in effects between monetary and fiscal stimuli
- The post-war years as a better analogy than the 1970’s for the current backdrop
- Different types of inflation and varied downstream effects
- Path dependency and the wide dispersion of possible scenarios
- Whether transitory or sustained, it’s hard to disagree that we now have higher inflation volatility
- What types of strategies can thrive during inflationary periods
- Shifting regimes and the ‘primordial soup’ of portfolio construction
- Transition phases and leadership changes on decade-long cycles
- Why commodity-sensitive stocks haven’t really protected portfolios in inflationary shocks
- The case for multi-asset trend and global macro momentum strategies
- Protecting against inflation volatility and prolonged bear markets – a historical perspective
- Portfolio construction for a new macroeconomic scenario
This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.
*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.
