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:
How much economic pain will central banks tolerate in their efforts to control inflation?
Are startling gyrations in deep and liquid markets such as currencies and global sovereign debt uncovering the potential for a financial crisis?
How will we know when the stock market has reached a bottom?
Is the Federal Open Market Committee relying on the wrong indicators as it makes policy decisions?
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 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.
The role that U.S. energy production plays in offsetting the loss Russian supplies of crude oil, natural gas and coal.
China’s position as an energy consumer amid the geopolitical shifts the conflict has spurred.
New challenges to a hoped-for green energy transition as energy security and decarbonization entail increasingly steep tradeoffs.
The potential for a beneficial reevaluation of global goals for energy and how they may be achieved.
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.
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.
Why expectations for a fast U.S. decline in cases could be overly optimistic
The factors driving significant variations in infection rates in highly vaccinated countries
Whether loosening global travel restrictions are likely to impact case counts
Factors informing the CDC’s booster recommendations
Whether COVID-19 is likely to become endemic, such as the seasonal flu
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.
The drivers of low interest rates since the financial crisis
Noise versus signal related to predicting future monetary policy
The current and most likely future shape of the yield curve
Northern Trust’s outlook for total bond returns
The merits of owning bond funds versus individual bonds
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?
An overview of the semiconductor industry and its role in the technology ecosystem
An estimate of how long it will take to fix the supply-demand mismatch
Corporate and government responses to the strategic issues laid bare by the shortage
The long-term outlook for the chip industry as companies pursue digital transformations
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.
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.
What’s at stake when it comes to inflation — why containing inflation is important in the first place
The two broad categories of inflationary forces: cyclical and secular
The drivers of recent spikes in consumer and producer prices
Why housing market inflation bears watching over the coming months
Northern Trust’s near- and longer-term outlook for inflation
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.