THE AGE OF DISRUPTION

THE AGE OF DISRUPTION

Counterpoint 2022 Mid-Year Investment Outlook
Risks and opportunities in a changing world


While the war in Ukraine, Covid-19 and Fed tightening are making the outlook more uncertain, we believe our moderate risk-on positioning remains tactically appropriate as the initial shock is now behind us. Longer term, the investment implications of a changing world are profound.
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It’s important to remain focused on the long term and avoid over-reacting to short-term news. Portfolios should be adjusted in
a measured way to the evolving environment."

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Disruption across companies and sectors
The global outlook is more uncertain as markets confront a stagflationary shock, lowering economic and earnings growth and raising inflation. Energy and food prices are high, supply chains and trade flows disrupted, financial conditions tighter, and business and consumer confidence lower.
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Disruption across companies and sectors
Why we think the rate rise won’t rock the boat
Why we think the rate rise won’t rock the boat
All this has a macro counterpart, too. Inflation may start slowing from high levels over the next few months as demand moderates from super-strong rates to more normal ones, supply is gradually repaired, the monetary stance gets back to neutral, the US fiscal impulse has already waned and the comparison with the corresponding period of the previous year mechanically pushes inflation lower – if there are no further price shocks.
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What to make of inflation
Currency-wise, this suggests a fairly neutral view on the US dollar and sterling, as we think the euro – eventually – will probably recover somewhat, as the European Central Bank slowly starts to normalise interest rates. We still expect a weak Swiss franc and Japanese yen, and we’re fairly neutral on emerging market currencies.
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What to make of inflation
Our five conviction calls
We have identified five calls we believe will dominate the global economy and financial markets over the rest of 2022 and beyond.
Companies

When the going gets tough

When the future looks increasingly uncertain, investing in quality growth companies
with financial flexibility is our preferred strategy.
 

Sectors

Reshoring, restoring, reassuring

Resilience will be an important differentiator as companies and governments
continue to focus on addressing supply-side disruptions.

The economy

Learning to live with inflation

The transitions to more local supply chains and a green economy are inflationary
but beyond central bank control, so policymakers are unlikely to hike rates aggressively.

Energy

Renewable and reliable

The war in Ukraine could and should accelerate investment in cleantech.
Reducing reliance on fossil fuels can mitigate geopolitical risks.

Technology

Powering through thick and thin

Technology improvements across all themes are speeding up every year,
and shocks like Covid-19 and the Russia/Ukraine war can accelerate disruption.

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How we are moving portfolios
See how our portfolios are developing for 2022. In this section we discuss our approach for strategic and tactical asset allocation.
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How we are moving portfolios
Translating our views into portfolio strategy
Translating our views into portfolio strategy
Creating a globally diversified investment strategy implemented through best-in-class vehicles to try and generate attractive risk-adjusted returns.
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Investing puts your capital at risk.
Lending is subject to status.

Important Information

Non-Independent Research

The information contained in this article is defined as non-independent research because it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research, including any prohibition on dealing ahead of the dissemination of this information.

How to Use this Information

This article contains general information only and is not intended to constitute financial or other professional advice or a recommendation that any recipient of this information should make any particular investment decision. Always consult a suitably qualified financial advisor on any specific financial matter or problem that you have.

Except insofar as liability under any statute cannot be excluded, neither Brown Shipley nor any employee or associate of them accepts any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this article or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this article.

Investment Risk

Investing in stocks either directly or indirectly carries investment risk. The value of equity based investments may go down as well as up over time due to factors such as, market volatility, interest rates, and general economic conditions. This issue shares forecasts, which are not a reliable indicator of future performance.

Information correct as at 21 June 2022.

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