Market Currents

Wages are rising and unemployment hit a 50-year low. But while that’s good for job seekers, it’s potentially challenging for policymakers fighting inflation. At the heart of this dynamic is a tight labor market–one where the demand for workers is greater than the supply of jobs. In this episode, we ask: where did the workers go? 

To answer that, we talked to John Challenger, CEO of Challenger, Gray and Christmas, the nation’s first executive outplacement firm. John’s firm helps companies support workers transitioning careers or finding new jobs, giving him a unique and broad view of the labor market. And the story is more complicated than just more jobs and fewer workers. In recent months, John has seen differing trends develop across industries like tech, manufacturing, and distribution while changes to remote work and hybrid productivity have added new nuances for workers and employers alike. Together, we unpack who has left the labor force, why, and what industries were hit hardest. Plus, what to make of recent layoffs at some of the nation’s biggest companies. 

Join us as we explore what this means for companies, the marketplace, and you.

Highlights:

• Why high employment is seen as a problem (2:13)
• Who has left the labor force (4:32)
• The pandemic changed how we work (7:14)
• How inflation will affect this expansionary period (10:12)
• What layoffs signal about the economy (12:48)
• How to retain workers in a tight labor market (18:18)

Links:

• Northern Trust - Wealth Management
  • https://www.northerntrust.com/united-states/what-we-do/wealth-management
• Northern Trust Twitter
  • https://twitter.com/NorthernTrust
• Katie Nixon Bio
  • https://www.northerntrust.com/united-states/insights-research/wealth-management/experts/nixon-katie
• Katie Nixon LinkedIn
  • https://www.linkedin.com/in/katherine-nixon-61783816
• Challenger, Gray, & Christmas Website
  • https://www.challengergray.com/
• John Challenger LinkedIn
  • https://www.linkedin.com/in/john-challenger

Feedback:

If you have questions about the show or topics you'd like discussed in future episodes, email our producer ([email protected]).

Katie Nixon, chief investment officer at Northern Trust Wealth Management, breaks down 2023’s first University of Michigan Consumer Sentiment Survey. The survey — which tracks how respondents feel about the economy — offers a valuable window into consumer behavior, making it key for policymakers and investors.

While January’s survey reflected plenty of optimism, with inflation expectations receding for the fourth month in a row, it wasn’t all good news. Two-thirds of consumers expected an economic downturn in the next year. How will that affect future inflation? And what does it mean for the trajectory of Federal Reserve policy?

Join Katie as she interprets the survey’s findings, from concern about a wage-price spiral to the Fed’s silver lining — and why it should matter to you.  

Highlights:

• Consumer sentiment on personal finances & durable goods (0:40)
• Inflation expectations & the wage-price spiral (1:02)
• Consumers expect economic downturn (1:45)
• Why investors and policymakers value sentiment data (2:00)
• Why the January responses are a win for the Fed (3:21)
• The silver lining to consumer pessimism (3:46)

Links:

• University of Michigan Consumer Sentiment Survey
• Northern Trust - Wealth Management
• Northern Trust Twitter
• Katie Nixon Bio
• Katie Nixon LinkedIn

Feedback:

If you have questions about the show or topics you'd like discussed in future episodes, email our producer.

This year has offered little shelter to investors trying to avoid downdrafts across all asset classes. Inflation has been stickier and more unpredictable than expected. The Federal Reserve and global central banks have been more hawkish as they struggle to manage inflation without creating economic harm. Global interest rates have been extremely volatile with consequences for stock valuations as equity prices and corporate earnings are cast into doubt. 

Everyone from investors to wage-earners has joined central bank policymakers in closely watching data releases to see which parts of the economy have begun responding to interest rates rising at the fastest clip in 40 years. Northern Trust hosted a webinar with clients on Sept. 28 where Katie Nixon, Chief Investment Officer for Wealth Management discussed clients’ most pressing questions with Carl Tannenbaum, Northern Trust’s Chief Economist, Chris Shipley, chief investment strategist for North America and Tim Johnson, head of portfolio solutions for global fixed income. This podcast is an excerpt from their conversation.

The group discusses:

Carl Tannenbaum is the Chief Economist for Northern Trust. He briefs clients and colleagues on the economy and business conditions, prepares the bank’s official economic outlook and participates in forecast surveys. Before joining Northern Trust, Carl spent four years leading the Federal Reserve’s risk section. He was deeply involved in the central bank’s response to the 2008 financial crisis, helped to create and conduct its stress testing program, and advised senior Federal Reserve leaders on developments in banking and the financial markets.

Christopher Shipley is head of fundamental equities at Northern Trust Asset Management, where he oversees the firm’s fundamental equity research and portfolio management efforts. Chris is a voting member of the firm’s Tactical Asset Allocation Committee and Investment Policy Committee. He is also co-portfolio manager of the Northern Global Tactical Asset Allocation Fund.

Tim Johnson is the Head of Portfolio Solutions and member of the global fixed income team at Northern Trust Asset Management. In this capacity, Timothy heads three key groups within global fixed income: our passive/index business, portfolio construction, and quantitative research. In addition, Timothy is also a member of the Fixed Income Strategy Committee, a group that formulates the fixed income platform’s strategic macroeconomic and investment themes that in turn informs overall strategy, risk budgeting and portfolio construction across all fixed income portfolios.

The first quarter of 2022 saw negative returns across the U.S. bond market as persistently rising inflation surprised central bankers and bond investors alike. Dramatically rising interest rates have focused bondholders’ attention on fixed-income investments – even provoking some to abandon the asset class entirely.  

In this episode of Market Currents, Northern Trust’s Katie Nixon welcomes Peter Mladina, director of portfolio research for Wealth Management, to explore the purpose of fixed-income securities in volatile and uncertain conditions, which seem likely to shape the investing landscape for the foreseeable future. 

Mladina discusses:

Peter Mladina is responsible for applying research, tools and methods that support asset allocation, portfolio construction, investment selection and best practices in portfolio management to the wealth management investment process.

Peter is an Adjunct Professor of Economics at UCLA, where he teaches applied finance for the Master of Applied Economics program. His research on asset allocation and portfolio construction has been published in peer-reviewed journals and he is a co-author of the CFA Institute’s revised Level III asset allocation curriculum. He received a Bachelor of Arts degree in Economics from UCLA and Master of Business Administration degree from Edinburgh Business School.

The war between Russia and Ukraine is a direct conflict between two of the world’s biggest commodity exporters, causing disruptions that will be felt for years. As European leaders seek to reduce or eliminate their countries’ exposure to Russian energy supplies and western companies voluntarily exit the country, maybe never to return, the conflict is reshaping global energy markets. 

In this episode of Market Currents, Jackson Hockley, Northern Trust’s analyst covering energy joins Chief Investment Officer Katie Nixon to talk through the ways Russia’s invasion of Ukraine and global reactions to the war are upending expectations for producers and consumers as well as a hoped-for green energy transition. 

Hockley discusses: 

Jackson Hockley is the senior energy and materials analyst at Northern Trust. He has followed the energy sector for more than three decades and is responsible for macro analysis of the energy and materials sectors as well as individual company research and stock recommendations. Jackson is a CFA charterholder and holds a bachelor of science degree in investment finance from Arizona State University.

While the U.S. stock market has outperformed European indices for years, it is important to remain aware of the benefits of global diversification. And recently, we have begun to see changes in Europe giving us greater confidence in this view: European economic growth is expected to slightly outpace the U.S. this year, and equity market valuations have come down, potentially offering a more attractive entry point for geopolitical, monetary policy, earnings and sector diversification benefits. 

In this episode of Market Currents, Northern Trust’s Katie Nixon is joined by Wouter Sturkenboom, the bank’s chief investment strategist for the Europe, Middle East and Africa region as well as the Asia-Pacific region. Katie and Wouter discuss: 

About our guest:

Wouter Sturkenboom, CFA, CAIA, is chief investment strategist for EMEA and APAC at Northern Trust. He is responsible for formulating the regional asset allocation views, putting those views in a global context and communicating the firm’s opinions. As a member of the Interest Rate Strategy Committee and Investment Policy Committee, Wouter helps produce long-term asset class forecasts, as well as set tactical and strategic portfolio allocations and recommendations.

Wouter is a CFA® charterholder and is a certified Chartered Alternative Investment Analyst. He holds a master’s degree in international affairs from George Washington University and master’s degree in international economics from Maastricht University.

Several months ago, it appeared as if a return to normalcy from the COVID-19 pandemic could be in sight. Primarily due to the spread of the Delta variant, however, the picture has become considerably more clouded. With individuals, companies, medical authorities and governments all continuing to react to the changing dynamics, and corresponding information and opinions broadcast 24/7, the landscape can be confusing and muddled. In this environment, expert insight is essential for all, including investors. 

In this episode of Market Currents, Northern Trust’s Katie Nixon is joined by healthcare sector senior analyst Erick Noensie to discuss the underlying data informing current expert views on the state of the pandemic. With a Ph.D. from Johns Hopkins Medical School, Erick has been an invaluable resource to Northern Trust clients throughout the pandemic. 

Erick discusses:

About Erick Noensie:

Erick Noensie is a Vice President at Northern Trust, where he covers the healthcare sector as a senior equity analyst. Prior to joining Northern Trust in 2018, Erick held several senior analyst and portfolio management roles focused on the healthcare, biopharmaceutical and biotechnology sectors at well-known asset managers. Erick received a Ph.D. in Medical Genetics from The Johns Hopkins School of Medicine and a B.A. in Biology from Cornell University.

As economic reopening continues and supply-demand imbalances lead to price increases, investors are understandably fixated on the future path of interest rates — a key driver of future growth and returns. But in this particularly unusual period of economic history, what will the Fed do?

Many believe higher inflation is transitory and that the Fed should wait it out. Others argue that it should take action now to get ahead of a potential problem in the future. 

In this episode, Colin Robertson, Northern Trust Asset Management’s head of fixed income, weighs in on this debate. To do so, he provides historical context, interprets Fedspeak and illuminates the economic and policy dynamics that will drive interest rates going forward. 

Colin discusses:

About Our Guest:

Colin Robertson is an executive vice president and head of fixed income for Northern Trust Asset Management. This role includes overseeing fixed income investments for individual and institutional investment management accounts at Northern Trust, Northern Funds and Northern Institutional Funds. Through his leadership managing interest-rate-sensitive and credit-sensitive fixed income portfolios, Northern Trust has built a world-class fixed income team, investment process and products.

As the U.S. economy continues to reopen amid relaxed COVID-19 mitigation measures, pent-up demand is outstripping supply in many cases. One acute example is in the semiconductor chip industry, which provides “the brain” inside a wide range of products that power our modern lives, including smartphones, cars and even washing machines. 

In this episode, Northern Trust’s Katie Nixon is joined by Senior Technology Analyst Deborah Koch to sort through this important topic and answer some key questions: How long will the global chip shortage last? What consequences could it have on inflation and the economy? What regulatory response will ensue? 

Deborah discusses:

About Guest:

Deborah Koch is a senior equity research analyst at Northern Trust focused on the technology sector. With more than 30 years of experience, she has built a track record of leveraging forward-thinking vision to identify and help clients benefit from market shifts in the technology sector. Before joining Northern Trust, Deborah held several senior analyst and portfolio management roles at well-known asset managers. She is a CFA® charterholder.

Summary:

Concerns about inflation have filled financial headlines recently as U.S. consumers reemerge from their homes and take note of higher prices and supply shortages in certain areas of the economy. But will higher inflation last? Or will it quickly revert back to more modest levels seen in recent decades? 

In this episode, Northern Trust’s Katie Nixon is joined by Chief Economist Carl Tannenbaum to sort through this important topic, which has significant implications for the economy, markets and investors’ portfolios. 

Carl discusses:

Related Insights:

About Guest:

Carl Tannenbaum is a chief economist at Northern Trust. In this role, Carl briefs clients and colleagues on the economy and business conditions, prepares the bank’s official economic outlook and participates in forecast surveys. He is a member of Northern Trust’s investment policy committee, capital committee and asset/liability management committee. Prior to working at Northern Trust, Carl spent four years leading the Federal Reserve’s risk section and was deeply involved in the central bank’s response to the 2008 financial crisis.