A New Age for Geopolitics and Global Markets

Matt Eagan, Portfolio Manager and Co-Head of Loomis Sayles' Full Discretion Team, lays out three key themes for fixed income investors.

In this video, Portfolio Manager and Co-Head of Loomis, Sayles & Company’s Full Discretion Team Matt Eagan, CFA® discusses a “tectonic shift” signaling consequential geopolitical and global market changes that investors should heed. While recent events – Covid-19, rising inflation, and Russia’s war on Ukraine – are without question momentous, they may reveal three important evolving themes.

Highlights include:
  • An increasingly multipolar world suggests that the world order is in flux with global players like China, Russia and India challenging American dominance. This means that the world is a less stable place where peace may no longer be a sure thing.
  • Waning global security and stability, suggesting an unwinding of the globalization trend of recent years, may lead to sovereign, investment, and corporate risk in the form of supply lines and energy sources. More broadly, the increasing implementation of financial sanctions, while perhaps expedient politically, could risk the US dollar’s preeminence as the global reserve currency (particularly in light of China’s desire to put the renminbi forward as a prominent global currency).
  • The third theme for discussion is a declining working age population in some countries, which could lead to increasing labor bargaining power and worker wages, and ultimately, potential challenges to corporations and their earnings.
Investors may therefore anticipate increased volatility, expect the unexpected on the geopolitical stage, and experience greater wage and price inflation, amounting to an environment that many investors have never experienced. All of this suggests investors should move forward with care, particularly when investing abroad.
All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

This material is provided for informational purposes only and should not be construed as investment advice. The analysis and opinion expressed represent the subjective views of Matt Eagan as of March 2022, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted. Actual results may vary.

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