Expert: Kerry Craig - Interest rates, China, Climate & AI | J.P. Morgan Asset Management
Dec 7, 2023
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Kerry Craig, Global Market Strategist at J.P. Morgan Asset Management, discusses key topics including interest rates, China's challenges, climate change, and AI. They also explore the impact of these themes on economic volatility, portfolio construction, and return forecasts, emphasizing the importance of diversification and climate-related investments.
Central banks are still credible in achieving their long-term inflation targets and higher interest rates are expected.
Artificial intelligence (AI) is a major theme for the next decade and investing in AI-related technologies and companies is emphasized.
China's market conditions present growth opportunities but also volatility and political risks; investors should consider the potential and challenges in the Chinese economy.
Deep dives
Key Points: Monetary Policy
The podcast discusses the current state of monetary policy and its impact on interest rates and inflation. The speakers believe that central banks are still credible in achieving their long-term inflation targets. They expect inflation to be close to target levels and anticipate higher interest rates as a result. The focus is on balancing the need to restore economic confidence while avoiding excessive price increases. Overall, they emphasize the importance of considering the impact of inflation and interest rates on investment decisions.
Key Points: Artificial Intelligence
Artificial intelligence (AI) is highlighted as a major theme for the next decade. The speakers recognize the potential for AI to significantly impact various sectors of the economy, leading to enhanced productivity and economic growth. While the exact timing and magnitude of AI's influence remain uncertain, they expect it to contribute positively to overall growth and investment returns. The importance of adopting a long-term view and considering investment opportunities in AI-related technologies and companies is emphasized.
Key Points: China's Market Assumptions
The podcast provides insights into China's current market conditions and long-term assumptions. The speakers describe the stabilization of the Chinese economy and the government's efforts to restore consumer and corporate confidence amidst challenges in the property sector. They highlight China's ongoing transition from an emerging to a middle-income economy, which presents demographic and productivity challenges. However, they also recognize the potential for growth, especially in emerging markets, and encourage investors to consider the opportunities in China, balanced with volatility and political risks.
Key Points: Climate Considerations
The podcast acknowledges climate change as a significant investment theme for the coming decade. The speakers highlight the increasing focus on sustainability and climate-related policies, which are expected to drive investment in renewable energy, infrastructure, and other climate-related sectors. They discuss the potential positive impact on various industries, such as food production and productivity enhancements resulting from technology development. While uncertainties remain, they note the importance of considering environmental, social, and governance (ESG) factors and the long-term implications of climate-related investments.
Key Points: Building a Portfolio
The podcast provides guidance on building a portfolio based on the discussed themes. The speakers emphasize the importance of diversification and broad investment across various asset classes. They suggest considering a mix of equities, fixed income, and alternative investments to enhance returns and mitigate risks. The podcast also mentions the value of active management in a volatile market and highlights the potential benefits of investing in real assets. Overall, the focus is on adopting a long-term perspective and selecting investments that align with the predicted market assumptions.
Kerry Craig is a Global Market Strategist at J.P. Morgan Asset Management, and joins us today to talk about the Long-Term Capital Market Assumptions series. This report has been running for many years, and today we unpick four key investing thematics emerging from the paper with Kerry.
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This episode contained sponsored content from J.P. Morgan Asset Management.
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