International markets are in a new era of fast economic growth, escalating interest rates as well as high inflation.
That is according to the Capital Group Chairman, Tim Armour, one of the world’s leading asset managers. Capital Group is a publicity-shy and venerable LA-based investment group which manages $1.4 Trillion. Tim reckons that the current seismic is a massive shift and it is real.
Tim says that markets have exhibited signs of fatigue recently. Equities have struggled to set new highs as well as bond markets stabilizing after the shock election of Donald Trump in November, and that has ignited several changes in asset prices. Interest rates have declined pretty much during his whole career, and his guess is that he has seen the bottom. He noted that some asset managers are skeptical that the election of Trump will ultimately end the status quo era of the sluggish economic growth coupled with subdued interest rates which have reigned since the period of financial crisis.
The financial legend admits that market regime changes are usually hard to identify and warns that there will clearly be more turbulent times ahead. That is due to the many incoming government’s policies uncertainties. But he confirms that markets are apparently facing an inflection driven by an increase of populism around the world. Globalization is being challenged in the US, China, and other countries.
Tim notes that while utility stocks in the famous S&P 500 are almost flat since the recent election, real estate shares have increased by 2.3 percent. Financial companies have increased nearly 16 percent while oil and gas sector have powered by almost 38 percent. He says that the industry rotation they have seen is incredible. Early cycle stuff has begun taking off, but on the other hand, interest rate-sensitive and defensive category of investment have started to roll over.
About Tim Armour
Tim Armour is chairman and CEO of Capital Group. He is also the Chair and CEO of Capital Research and Management Company which is part of Capital Group. Tim is also the chairman of the CG Companies Management Committee. He is an equity portfolio manager boasting of 33 years of investment experience in the Capital Group. Early in his career, as an equity investment novice analyst at CG, he covered international telecommunications and US service companies. He began his profession at the CG as a participant in the Associates Program. He graduated with a bachelor’s degree in economics from the coveted Middlebury College.