Investment Wars

Debate: "Will the US Have a Shallow Recession?"

Featuring: Jack Janasiewicz, CFA, Portfolio Manager and Lead Portfolio Strategist for Natixis Investment Managers Solutions.

Sticky inflation, a hawkish Fed that is keeping interest rates high, placing increasing pressure on borrowers, a concerning global geo-political environment. These are concerns for the economy, not to mention an inverted yield curve that traditionally ends with recession.

In this podcast, our host, Joe Halpern, CIO of Fountainhead Asset Management has a wide ranging conversation with Jack Janasiewicz, CFA, Portfolio Manager and Lead Portfolio Strategist for Natixis Investment Managers Solution on the positives and negatives of today’s economy and what that may mean for a potential recession down the road.

Topics include:

• State of the economy
• Jobs and wages
• Housing
• Balance sheet of consumers and corporations
• Geo-political concerns

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: "China in Transition: Will the Chinese Consumer and Capital Spend Driven Innovation Propel China Forward?"

Featuring: Malcolm Dorson, Head of Emerging Markets Strategy and a Senior Portfolio Manager at Global X and Scott Helfstein, a PHD who is Head of Thematic Solutions at Global X.

China is in a transition: On one hand, declining global trade, debt issues in the real estate sector, aging and problematic demographic characteristics and increased friction with the West among other negative issues can lead to further slowdowns or even reversals in GDP. On the other, China still has much room for growth given their population is not urbanized to the extent of other developed nations (~60% vs 80% - 90% in USA, Europe, Korea and Japan) and consumer spend is at ~20% of GDP vs 45% in the US. And while not discussed much, China is spending heavily on future innovations inclusive of the future of energy where they outspend the US by 5x on EV.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

After a breather taken during August we are excited about the upcoming podcasts we plan to publish discussing how the future path of China affects global markets, innovation and the inverted yield curve. Tune in to hear the debates around these exciting topics.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: "How Do Higher Rates Affect the Economy and Market?"

Featuring: Bob Grunewald, CEO & Founder of Flat Rock Global, an alternative credit manager investing in areas of the credit market they believe are less efficient with the goal of preserving capital and generating current income.

In the face of a once in a century event, the government provided massive aid packages to the population during a period of already historically low interest rates. Consumer savings rates grew exponentially as remote work became a permanent feature and as service related businesses temporarily went off-line. At the same time, a global supply chain built for efficiency but not risk (i.e., redundancy and inventory) came to a screeching halt. The supply / demand construct went haywire and inflation increased worldwide. Then, Russia invaded Ukraine resulting in skyrocketing energy and food costs.

Many believed inflationary pressures would be temporary but it proved to be more stubborn than initially conceived. The Fed has so far raised interest rates at one of the quickest paces in history. This is considered “tightening” policy as the Fed is using this blunt tool to add expense to the system in addressing one of their primary objectives – to maintain inflation in a tight range. Consumers have used up much of those savings provided through aid packages and the student loan moratorium, which represents 9% of consumer debt is about to be up. Now both consumers and companies need to contend with materially higher borrowing costs.

Topics reviewed:

• Context of how the increase in yields affect a typical company
• How variable vs fixed rate debt are faring in the current environment
• Private vs public company debt
• How the consumer is holding up
• Views on yield curve inversion and inflation
• Three letter words: CLO Investing – what is it and why it isn’t quite so scary

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: "The Resilience of the 60/40 Portfolio"

Featuring Chris Tidmore, Senior Manager for the Vanguard Investment Advisory Research Center.

The 60/40 portfolio is perhaps the most popular approach to portfolio construction. Yet, in 2022, the 60/40 performed poorly as both equity and fixed income markets experienced double digit declines. What are the positives and negatives of this approach to investing? What are some attributes to consider? And are there perhaps better approaches to explore? All this and more is discussed in a wide-ranging and compelling conversation with Chris.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: “Will We Have a Hard Landing?”

Featuring Matthew Miskin, Co-Chief Investment Strategist at John Hancock Investment Management.

We have had one of the quickest and sharpest Fed rate hikes in history with federal funds yielding 5% - 5.25%, on the high side historically. Increasing rates is considered a “tightening” policy and is designed to slow the economy for one reason or another – the most recent justification due to fears of runaway inflation. As our guest Matt mentioned, it takes time for those yields to work its way through the market but there is no doubt it is having an effect. Simply put, consumers and companies alike now need to pay more interest when borrowing money. Will the pressure of higher borrowing rates result in a recession? And will that recession be quick and painless or long and painful? To find out, tune in to my and Matt’s wide ranging conversation exploring the reasons for and various possibilities of a recession.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: “US Debt Levels are Too High”

Featuring Matt Orton, Head of Advisory Solutions and Market Strategy at Raymond James Investment Management.

Congress passed the increase of our debt ceiling in the nick of time, averting the potential for the first US default on it’s debt – which we believe would have been devastating for both the US and global economy. However, the question remains – is our debt too high?

To answer this question, Matt and I have a wide ranging conversation inclusive of comparing government debt to that of corporations and individuals and checking in with other developed market countries with a focus on Japan whose debt levels are close to twice ours. We also cover what affects a high debt level may have on the economy longer term, and ways that the debt level may come down in the future.

This conversation is intertwined with past conversations we have had on demographics and the future of jobs as one touches on the realities that we may need to support more of the population in retirement age relative to today while AI, robotics and other technological innovations may assist in bringing down future costs – and debt.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: “Wage Inflation Will Increase for the Foreseeable Future Due to a Tight Supply of Workers”

Featuring Jeremie Capron, Director of Research and Managing Partner at Robo Global, and Matthew Bartolini, Managing Director, Head of SPDR Americas Research for State Street Global.

While there was a bit less of a “war” then usual, there were some relevant comments about the future of jobs and how it would affect inflation. For example, Jeremie highlighted how every time we have gone through a transition – agriculture, tech etc. – we came out the other side wealthier and with more jobs – this is a significant positive that is rather inflation neutral.

However, Matt noted a number of factors to believe we are in a new paradigm that may keep wage inflation high inclusive of the fact that nearly 30% of work spent is now done remotely, providing workers the flexibility and therefore edge to move more easily and the fact that the minimum wage has not kept up with inflation placing further upward pressure as the low end of wages gets pushed higher through regulation.

Following up on our prior episode, the fact that the world is aging will result in less population to fill jobs which may keep pressures on wage inflation for the foreseeable future – hopefully the productivity and efficiency Jeremie speaks to on this episode allows for wealth to continue to grow quicker than the inflation this may produce.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Debate: “Aging of the US Population Will Cause Deflation”

Featuring Brian LoDestro, Senior Portfolio Strategist at PGIM Fixed Income, and Douglas Gimple, Senior Portfolio Specialist, Fixed Income at Diamond Hill Capital Management, Inc.

Brian argued the affirmative: An aging population is expected to spend less for a variety of reasons. There will also be less workers and, historically speaking, when the labor force contracts so does economic growth. Less growth is deflationary. Ultimately, demand will slacken due to these reasons resulting in a deflationary environment.

Douglas argued the negative: He agreed that demand may slacken but so will supply for similar reasons – less workers producing product. Less workers can result in wage inflation due to labor shortages as well as product scarcity. Fair points for the case for potential inflationary pressures from aging demographics.

What we all agree on is that the developed markets primarily represented by the US, Europe and Japan is aging with population declines expected absent immigration. This is a long term characteristic to keep in mind as investors prepare for retirement.

Definitions: CPI: Consumer Price Index is a measure of the monthly change in prices paid by US consumers for a set basket of goods and services. It is a major measurement of inflation, relied upon by the Fed in making rate decisions.
PCE: Personal Consumption expenditures is a measure of spending on goods and services by people in the US. PCE is a broader view on spending as compared to CPI.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts and Spotify.

For inquiries: [email protected]

—


IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.

Introducing...Investment Wars!

Our inaugural episode features Meera Pandit, Executive Director, Global Market Strategist at J.P. Morgan Asset Management & Lara Rhame, Chief U.S. Economist at FS Investments. In this episode, the two go head-to head in a debate on the following claim: inflation will revert to the Fed goal of 2% in the next 1 - 3 years.

Never miss an episode — subscribe to Investment Wars on Apple Podcasts, Spotify, and iHeartRadio.

For inquiries: [email protected]

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IMPORTANT DISCLOSURE: Obsidian CIO sponsors the podcast to further education and critical thinking about the factors that affect markets and investing, and the podcast does not provide investment advice. Investment advice is offered only to clients of Obsidian CIO who have entered into an advisory agreement and with whom Obsidian CIO has identified individual objectives, risk tolerance, and other investment needs.