In this latest installment of Real-Time with Jordi Visser, Jordi gives an update on overall market sentiment and contagion from the past several weeks of volatility. Jordi believes the market has re-priced significantly across asset classes, which Jordi emphasized in his latest update and can be seen as an adjustment to a new environment coming out of COVID rather than a systemic global weakening. Jordi believes that this new environment will be marked by higher nominal GDP and higher inflation.
Jordi analyzes the performance of credit relative to other asset classes and highlights relatively strong performance. While announcements from the Fed did have an initial impact on the credit and equity markets, Jordi notes that the markets quickly focused on other news. Additionally, Jordi believes impacts on the credit market have been the result of rate hikes rather than credit spreads.
As COVID now appears to be entering into an endemic phase and we go through a true re-opening for the first time in two years, Jordi makes several predictions for the year to come:
- We will see mean reversion in inflation metrics.
- Commodities will continue to move higher.
- The US market will underperform relative to global markets.
Jordi also flags that productivity has increased for many companies and major costs to business and shipping factors have been eliminated – another reason CPI is positioned to decrease as companies take control over their margins. He compares the current environment to 2003-2007 and gives analysis to support his thesis that this period can be viewed as the re-opening that will send lockdown baskets lower.