Economy recovering from pandemic "heart attack"

Thursday 22 April 2021

Private investment bank Julius Baer hosted its bi-annual market outlook event this week, focusing on the recovery of the global economy and what this means for investment opportunities.

The event was opened by Head of Private Banking, Jean-Luc Le Tocq, who welcomed the bank’s Chief Economist and Head of Global Research, Christian Gattiker-Ericsson to the stage via-video link first.

“We will look back at this decade and see there were many significant changes,” said Mr Gattiker-Ericsson. “It was the first time an event affected the backbone of the post-industrial society,” he said when referring to the effects of the corona virus pandemic on global markets.

Pictured: Mr Gattiker-Ericsson appeared via video-link for the annual update.

Mr Gattiker-Ericsson focused his talk on forecasting and reviewing the global markets, leading to the assessment that “the markets are performing well.”

He highlighted an increase in global spending and business formation in the US as two surprising but positive trends appearing over the last year. Using his analysis as a base, JB’s Head of Investment Management spoke about how and where to invest in the current climate.

“Remain diversified, stay in assests that can beat inflation and remain in liquid investments,” said Craig Allen. “The big takeaway is that the economy is actually recovering. Admittedly from a heart attack, but it is recovering.”

Pictured: “The UK is recovering quicker than expected,” said Mr Allen.

Questions were taken from numerous people who attended the breakfast presentation, and the issue given most focus was rising inflation.

“Inflation is the biggest risk to everyone right now,” said Mr Allen. “We see it in petrol prices for example, not that long ago it was below 100 ppl, and now we’re roughly 135 ppl. This is real inflation in front of your eyes.”

“This is a 30% increase in five years, and I’m sure people’s wages haven’t increased by 30% in five years,” he said.

Mr Allen said it was an unusual trend, with inflation continually rising.

“The US Federal Reserve said they don’t mind if inflation hits 3%, which is extraordinary.”

Pictured: "This is going to get worse," said Mr Allen, when referring to a graph on inflation vs real cash returns.

Julius Baer has nearly 100 staff in Guernsey and offers private investment solutions to a number of clients.