Don't Overweight Geopolitics in Investment Decisions [VIDEO]

Jordi Visser

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In this installment of Real Time with Jordi Visser, Jordi looks through geopolitical and fiscal headlines to provide a modestly bullish market view. By looking at the ISM Manufacturing Index as a leading indicator for the future state of the economy, Jordi asserts that higher production numbers can be interpreted as a reason to evaluate the market for buying opportunities.

Comparing recent earnings reports to the current market prices, Jordi also makes the case that, on aggregate, the market is less expensive, and encourages investors to seek out buying opportunities. He attributes the discounts to bearish sentiment and investors who are trading short-term geopolitical news.

Jordi emphasizes the importance of separating nominal GDP from real GDP as we settle into a world with structurally higher inflation and a weaker dollar. He uses this distinction to point out that although the market may post numbers near a technical recession, this should not be problematic to the market as long as unit labor costs stay near current levels. He also points to the commodity copper rather than crude as an indicator of market strength.

Despite more news around Russia and the Fed in the United States, Jordi believes that the most important news and economic factors is concerning re-opening. Jordi indicates that this is due to increased net worth and individual spending coming out of this period. While oil and gas prices continue to rise, Jordi asserts that these numbers are tempered by the overall increase in consumer net-worth. Finally, despite projecting a peak inflation number this year, Jordi shares his belief that the market will finish up in 2022.

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