About GlobalTrust Impact Capital
GlobalTrust is a leading alternative asset investment and global advisory firm serving developed nations, frontier, and emerging markets. As such GlobalTrust will share periodically global insights on various topics in hopes, that you as a reader will gleen insights and awareness of the global capital markets, alternative investment sector and the transformational changes we see in topics such as “Future of Money”
It is our desire, that these insights are a blessing for you as we navigate the future together.
Adjusting To The New Regime
Market narratives have been in flux all year: from recession and sharp rate cuts earlier in the year to soft landing hopes over the summer to more recently – a higher-for-longer rates backdrop. We have long argued we don’t see central banks coming to the rescue. The recent surge in bond yields reflects markets coming around to our view, we think. Yields on benchmark 10-year U.S. Treasuries have risen to 16-year highs above 4.50%. See the chart below. Policy rates may have peaked, yet we don’t see central banks cutting rates to levels that stimulate growth any time soon.
Inflation Holding Tight
Inflation has been falling as pandemic mismatches unwind. We think about two-thirds of the spending shift to goods from services has unwound. Goods prices are dragging inflation down as demand normalizes. A skills mismatch is also normalizing, helping cool wage growth. Importantly, inflation declining through 2023 has come at the cost of economic growth. In Europe, manufacturing activity has slowed sharply. Meanwhile, a stealth stagnation in the U.S. has gone under the radar. GDP data suggest activity has held up in the U.S., but on some measures, the U.S. economy hasn’t grown much in the last 18 months. An outright recession is still in the cards. But, more importantly, we expect the economy to broadly flatline for another year, making it the weakest two-year growth stretch in the post-war era, aside from the Global Financial Crisis.
We think labor market tightness – low unemployment – has been misconstrued as a sign of economic strength. But in this new regime, the typical business cycle framing – likely does not apply.
Mega Forces New Alternative Asset Investment Opportunities
Mega forces are structural changes we think are poised to create big shifts in profitability across economies and sectors. The mega forces are not in the far future – but are playing out today. The key is to identify the catalysts that can supercharge them and the likely beneficiaries – and whether all of this is priced in today.
We are tracking five mega forces: digital disruption like artificial intelligence (AI), the rewiring of global supply chains driven by geopolitical shifts and economic competition, the transition to a low-carbon economy, shifting demographics and a fast-evolving financial system. We believe granularity is key to find the sectors and companies set to benefit from mega forces.