1 00:00:05,820 --> 00:00:08,190 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:08,429 --> 00:00:10,889 Speaker 1: Aylmer. It's a huge year for elections around the world 3 00:00:10,889 --> 00:00:15,270 Speaker 1: with nearly half of the global population voting in 2024. 4 00:00:15,540 --> 00:00:20,759 Speaker 1: India, Indonesia, Iran, France, UK, the European Parliament, they've had 5 00:00:20,759 --> 00:00:23,730 Speaker 1: elections already. Of course, we've got the US president election 6 00:00:23,730 --> 00:00:27,329 Speaker 1: coming up in November. It all has a significant impact 7 00:00:27,330 --> 00:00:31,710 Speaker 1: on financial markets and investors. Niall O'Sullivan is the Global 8 00:00:31,710 --> 00:00:36,299 Speaker 1: Solutions Chief Investment Officer at Investment Giant Mercer. He's normally 9 00:00:36,299 --> 00:00:38,640 Speaker 1: based in London, but he's out here for the Mercer 10 00:00:38,640 --> 00:00:42,360 Speaker 1: Global Investment Forum. Remember, this is general information only. You 11 00:00:42,360 --> 00:00:45,839 Speaker 1: should always seek professional advice before making investment decisions. Niall 12 00:00:45,840 --> 00:00:47,400 Speaker 1: O'Sullivan, welcome to Fear and Greed. 13 00:00:47,909 --> 00:00:48,360 Speaker 2: Thank you. 14 00:00:49,380 --> 00:00:52,318 Speaker 1: Tell me, this year, have you ever seen a year 15 00:00:52,320 --> 00:00:56,100 Speaker 1: like this with so much political activity and change? 16 00:00:56,880 --> 00:01:00,480 Speaker 2: Well, I'm not sure anyone has. I think over 50% 17 00:01:00,480 --> 00:01:03,840 Speaker 2: of the global population is voting over the course of 18 00:01:03,840 --> 00:01:08,520 Speaker 2: the year in multiple places. And clearly, there's a lot 19 00:01:08,520 --> 00:01:10,889 Speaker 2: going on, but there's probably a few underlying trends that 20 00:01:10,889 --> 00:01:13,020 Speaker 2: are quite interesting as well that we'll be able to 21 00:01:13,260 --> 00:01:16,290 Speaker 2: have seen through multiple elections, what has happened and what 22 00:01:16,290 --> 00:01:17,369 Speaker 2: is going to happen from here. 23 00:01:18,120 --> 00:01:20,610 Speaker 1: Okay. So, let's jump right into that now. There's a 24 00:01:20,610 --> 00:01:22,920 Speaker 1: shift to the right in some places, but then a 25 00:01:22,920 --> 00:01:25,619 Speaker 1: shift to the left in others. And then if you're 26 00:01:25,620 --> 00:01:27,509 Speaker 1: France, you sort of go right, and then you go 27 00:01:27,509 --> 00:01:31,499 Speaker 1: left. Can we bring out some of these trends coming 28 00:01:31,500 --> 00:01:33,839 Speaker 1: through? Because I mean, ultimately, we want to know what's 29 00:01:33,840 --> 00:01:35,670 Speaker 1: it mean for investing, but what are some of the 30 00:01:35,670 --> 00:01:38,010 Speaker 1: things you are seeing across these elections? 31 00:01:38,490 --> 00:01:41,069 Speaker 2: So, I think what's really interesting, and you nailed it 32 00:01:41,069 --> 00:01:43,440 Speaker 2: in your comment, that's why is it going either way? 33 00:01:43,770 --> 00:01:46,080 Speaker 2: And to some extent, what you're seeing is the impact 34 00:01:46,109 --> 00:01:50,520 Speaker 2: of inflation. So, inflation has come through, and obviously financial 35 00:01:50,520 --> 00:01:53,160 Speaker 2: commentators are talking about the fact that it's under control 36 00:01:53,160 --> 00:01:55,500 Speaker 2: and it's come back down. But if you've had an 37 00:01:55,500 --> 00:01:59,070 Speaker 2: increase in prices of five, six, seven, eight, 9%, depending 38 00:01:59,070 --> 00:02:02,099 Speaker 2: where you are, just because it's increasing at maybe two, 39 00:02:02,099 --> 00:02:04,500 Speaker 2: two and a half percent this year, you still have 40 00:02:04,500 --> 00:02:08,100 Speaker 2: that lived experience of the eight or 9% affecting you. 41 00:02:08,490 --> 00:02:11,010 Speaker 2: So, one of the trends when you look through is 42 00:02:11,040 --> 00:02:15,419 Speaker 2: it's usually the incumbent that is effectively being punished in 43 00:02:15,419 --> 00:02:17,849 Speaker 2: the various elections. So, in a lot of cases what 44 00:02:17,849 --> 00:02:20,040 Speaker 2: you're seeing is the party that was in power is 45 00:02:20,040 --> 00:02:21,989 Speaker 2: losing, whether it was on the left, whether it was 46 00:02:21,990 --> 00:02:24,629 Speaker 2: on the right. It is losing as a result of 47 00:02:24,660 --> 00:02:28,139 Speaker 2: that, because you've had instances like Poland, where it would've 48 00:02:28,139 --> 00:02:31,740 Speaker 2: swung from one side to the other, compared to other 49 00:02:31,740 --> 00:02:34,980 Speaker 2: instances where the incumbent party has been punished. So, I 50 00:02:34,980 --> 00:02:37,499 Speaker 2: think that that's one of the major trends, it's how 51 00:02:37,500 --> 00:02:40,288 Speaker 2: inflation plays out and what it means as a result. 52 00:02:40,709 --> 00:02:43,110 Speaker 2: I think the second thing that you would add to that is, 53 00:02:43,110 --> 00:02:47,639 Speaker 2: yes, on either side the extremes of politics, you are 54 00:02:47,639 --> 00:02:51,990 Speaker 2: seeing an increase in the vote there. But increasingly, you're 55 00:02:51,990 --> 00:02:55,650 Speaker 2: still seeing in most places between center left and center 56 00:02:55,650 --> 00:02:58,619 Speaker 2: right, still the center to a large extent is holding. 57 00:02:58,619 --> 00:03:01,620 Speaker 2: So, there's an in what's going on at the extremes, 58 00:03:02,070 --> 00:03:04,770 Speaker 2: but at the center, it is holding. I think the 59 00:03:04,770 --> 00:03:06,780 Speaker 2: third thing then is, as you say, what does that 60 00:03:06,840 --> 00:03:10,949 Speaker 2: mean? What's interesting is that across the board, you're not 61 00:03:10,950 --> 00:03:15,269 Speaker 2: really seeing anybody suggesting that it's time to become fiscally 62 00:03:15,270 --> 00:03:20,040 Speaker 2: more responsible. Generally speaking, you're continuing to see deficit spending 63 00:03:20,040 --> 00:03:21,750 Speaker 2: and we will probably talk about the US in a 64 00:03:21,750 --> 00:03:24,450 Speaker 2: few minutes as well. But effectively, if you look at 65 00:03:24,450 --> 00:03:28,888 Speaker 2: the underlying policies that governments are pursuing, it's not obvious 66 00:03:28,889 --> 00:03:31,559 Speaker 2: that there will be massive shifts as a result of 67 00:03:31,650 --> 00:03:34,619 Speaker 2: these elections going on. And so, it may be that 68 00:03:34,619 --> 00:03:37,530 Speaker 2: there will not be enormous shifts in the policies coming 69 00:03:37,530 --> 00:03:40,890 Speaker 2: through in the economic side as a result. And indeed, generally 70 00:03:40,890 --> 00:03:45,209 Speaker 2: speaking, absent some sort of existential shock, elections don't tend 71 00:03:45,210 --> 00:03:49,019 Speaker 2: to have a massive impact on markets, other than in 72 00:03:49,020 --> 00:03:51,809 Speaker 2: and around the election when uncertainty is removed, it usually 73 00:03:51,809 --> 00:03:53,580 Speaker 2: tends to be good for the markets in the short term. 74 00:03:55,020 --> 00:03:57,720 Speaker 1: Okay. So, let's go on to the US election. I 75 00:03:57,720 --> 00:04:00,660 Speaker 1: suppose reading through what you've just said, Niall, you can 76 00:04:00,660 --> 00:04:03,179 Speaker 1: argue that we need to get through the next six- 77 00:04:03,179 --> 00:04:07,500 Speaker 1: month period or less than that now, until November, to 78 00:04:07,500 --> 00:04:09,539 Speaker 1: get the election over and done with. And they don't 79 00:04:09,570 --> 00:04:12,569 Speaker 1: tend to move markets a lot. When you have such 80 00:04:12,570 --> 00:04:14,730 Speaker 1: as stark choice, I suppose, as you do in the 81 00:04:14,730 --> 00:04:17,040 Speaker 1: US, is it any different or is it just a 82 00:04:17,040 --> 00:04:18,870 Speaker 1: period we need to get through and then work with whoever 83 00:04:19,350 --> 00:04:23,040 Speaker 1: the winners is, their policies, and their trade views and 84 00:04:23,520 --> 00:04:24,779 Speaker 1: their spending views, et cetera? 85 00:04:25,559 --> 00:04:28,049 Speaker 2: So, I think if we divide into the economic issues and 86 00:04:28,049 --> 00:04:30,810 Speaker 2: the social issues, I think there are obviously some stark 87 00:04:30,810 --> 00:04:34,050 Speaker 2: choices coming through on maybe that more social side of 88 00:04:34,050 --> 00:04:36,630 Speaker 2: things. But if we were to look at the economic 89 00:04:36,630 --> 00:04:39,210 Speaker 2: side of things, and back to that point about the 90 00:04:39,210 --> 00:04:42,419 Speaker 2: say deficit spending as an example, it's not like one 91 00:04:42,420 --> 00:04:45,900 Speaker 2: side is suggesting that we should become much more fiscally 92 00:04:45,900 --> 00:04:48,270 Speaker 2: responsible than the other. It's not like one side is 93 00:04:48,330 --> 00:04:51,210 Speaker 2: suggesting we should be doing something dramatically different in terms 94 00:04:51,210 --> 00:04:54,299 Speaker 2: of fiscal spending or fiscal deficits compared to the other. 95 00:04:54,660 --> 00:04:58,380 Speaker 2: So, to an extent, that model of relatively large deficits 96 00:04:58,380 --> 00:05:01,589 Speaker 2: and continuing to power that goes through, is unlikely to 97 00:05:01,589 --> 00:05:05,188 Speaker 2: be all that different on either side. I think the Federal Reserve 98 00:05:05,190 --> 00:05:08,250 Speaker 2: continues to do what it's doing irrespective of the result. 99 00:05:08,700 --> 00:05:12,839 Speaker 2: I think that when you talk about broader trade, and 100 00:05:12,839 --> 00:05:15,900 Speaker 2: maybe the noise around tariffs and the things that come 101 00:05:15,900 --> 00:05:19,350 Speaker 2: with it, there's clearly a risk of some escalation in 102 00:05:19,469 --> 00:05:22,709 Speaker 2: global trade as part of that. But to be fair, 103 00:05:22,709 --> 00:05:26,940 Speaker 2: the incumbent administration is also facing a lot in terms 104 00:05:26,940 --> 00:05:29,550 Speaker 2: of global trade, and looking at areas like EVs, and 105 00:05:29,550 --> 00:05:32,250 Speaker 2: the like in terms of what's happening. So I think 106 00:05:32,250 --> 00:05:36,059 Speaker 2: the choice on the economic side may not be all 107 00:05:36,059 --> 00:05:38,490 Speaker 2: that different, though there could be a lot of saber- 108 00:05:38,490 --> 00:05:41,008 Speaker 2: rattling and noise between here and there. 109 00:05:41,850 --> 00:05:43,710 Speaker 1: Stay with me, Niall, we'll be back in a minute. 110 00:05:50,670 --> 00:05:55,469 Speaker 1: I am speaking to Niall O'Sullivan from Mercer. What about 111 00:05:55,469 --> 00:05:59,488 Speaker 1: India and emerging markets generally, but particularly India. Narendra Modi 112 00:05:59,670 --> 00:06:03,810 Speaker 1: was returned to power. India has an interesting place in 113 00:06:03,810 --> 00:06:07,320 Speaker 1: the world because it's kind of comfortable with the east 114 00:06:07,410 --> 00:06:11,459 Speaker 1: and the west, also a massive economy that's growing fast. 115 00:06:12,599 --> 00:06:14,998 Speaker 1: I suppose how do you see India as a player 116 00:06:15,000 --> 00:06:18,660 Speaker 1: in the global economy? And then the question after that, 117 00:06:18,750 --> 00:06:20,760 Speaker 1: how do you play that in an investment sense? 118 00:06:21,360 --> 00:06:24,450 Speaker 2: So, I think if you were to look at India generally and linking all 119 00:06:24,450 --> 00:06:26,940 Speaker 2: of the themes we just talked about together, he was 120 00:06:26,940 --> 00:06:30,029 Speaker 2: returned, but he was returned at less of a majority 121 00:06:30,029 --> 00:06:33,659 Speaker 2: than he had before. And again, I think representative that 122 00:06:33,660 --> 00:06:36,990 Speaker 2: general trend around incumbency not being a major positive in 123 00:06:36,990 --> 00:06:39,450 Speaker 2: elections. If you take the second part of what you're 124 00:06:39,450 --> 00:06:42,450 Speaker 2: saying, yes, in the period where you can be friendly 125 00:06:42,450 --> 00:06:45,448 Speaker 2: with either side of a discussion, it's probably a good 126 00:06:45,450 --> 00:06:49,080 Speaker 2: thing. And you're seeing that coming true. The economy is 127 00:06:49,080 --> 00:06:51,839 Speaker 2: continuing to power forward and we expect it to continue 128 00:06:51,839 --> 00:06:54,449 Speaker 2: to power forward. I suppose from an equity point of 129 00:06:54,450 --> 00:06:57,719 Speaker 2: view, though it needs to, because the valuations that they're 130 00:06:57,720 --> 00:06:59,730 Speaker 2: at are richer than they have been in the past. 131 00:06:59,730 --> 00:07:02,669 Speaker 2: And when you have richer valuations, that's okay, but you 132 00:07:02,670 --> 00:07:06,568 Speaker 2: need to grow into those valuations. In our portfolios, broadly 133 00:07:06,570 --> 00:07:10,260 Speaker 2: speaking, we would be positioned for an overweight to emerging 134 00:07:10,260 --> 00:07:13,860 Speaker 2: markets relative to developed markets coming through from here, but 135 00:07:13,860 --> 00:07:17,340 Speaker 2: not specifically heavier in India compared to other regions. Because 136 00:07:17,340 --> 00:07:19,500 Speaker 2: while we think the growth story as you outlined is 137 00:07:19,500 --> 00:07:22,710 Speaker 2: very positive, we would be somewhat wary of the valuations that 138 00:07:22,710 --> 00:07:25,859 Speaker 2: are coming alongside it. But that general point about the 139 00:07:25,889 --> 00:07:29,249 Speaker 2: emerging markets and other countries, like India who are positioned 140 00:07:29,699 --> 00:07:32,340 Speaker 2: to maybe do well in some of these in heightened 141 00:07:32,340 --> 00:07:36,300 Speaker 2: geopolitical tensions, yeah, we are positioning our portfolios to be 142 00:07:36,300 --> 00:07:39,120 Speaker 2: overweight them, relative to some of the developed markets. 143 00:07:39,389 --> 00:07:41,189 Speaker 1: Niall, you can't be in Australia and not expecting me 144 00:07:41,190 --> 00:07:44,219 Speaker 1: to ask you about China, because a lot of Australia's 145 00:07:44,219 --> 00:07:49,560 Speaker 1: wealth is dependent on China. What's your view there, particularly 146 00:07:49,950 --> 00:07:53,610 Speaker 1: with the fact that Beijing thus far has been reticent 147 00:07:53,610 --> 00:07:56,670 Speaker 1: to put too much money to get economic growth back 148 00:07:56,670 --> 00:07:59,790 Speaker 1: to those five, six, 7% levels that they used to have? 149 00:08:00,240 --> 00:08:03,000 Speaker 2: Yeah. And we're looking at this. You're seeing a big 150 00:08:03,089 --> 00:08:06,420 Speaker 2: bifurcation in the growth coming out of China. So, as 151 00:08:06,420 --> 00:08:09,300 Speaker 2: you say, an overall level, the growth is still coming 152 00:08:09,300 --> 00:08:12,000 Speaker 2: into the lower end of those ranges, hovering just either 153 00:08:12,000 --> 00:08:14,670 Speaker 2: side of five depending on the recent numbers that are 154 00:08:14,670 --> 00:08:17,490 Speaker 2: being published. But if you look at the growth inside 155 00:08:17,490 --> 00:08:20,759 Speaker 2: that, it's very much driven by the export side of 156 00:08:20,759 --> 00:08:24,990 Speaker 2: things, very much driven by the trade side of things, 157 00:08:25,260 --> 00:08:29,250 Speaker 2: and not being driven by the consumer- led side. The 158 00:08:29,250 --> 00:08:33,059 Speaker 2: third, Clenem has obviously not given any particular guidance that 159 00:08:33,059 --> 00:08:36,599 Speaker 2: there's going to be any more increases or any improvements 160 00:08:36,599 --> 00:08:39,299 Speaker 2: there. I think what we would say is that they're 161 00:08:39,299 --> 00:08:42,540 Speaker 2: probably, to an extent, doing the least that they can 162 00:08:42,540 --> 00:08:45,809 Speaker 2: do to keep things going along from a financial robustness 163 00:08:45,809 --> 00:08:49,199 Speaker 2: point of view. So, they are putting in place measures 164 00:08:49,200 --> 00:08:52,170 Speaker 2: to insulate parts of the property system, insulate parts of 165 00:08:52,170 --> 00:08:55,139 Speaker 2: the people that are there, but not necessarily doing thing 166 00:08:55,349 --> 00:08:58,619 Speaker 2: to lead to turbocharged growth. And I think that's possibly 167 00:08:58,619 --> 00:09:01,830 Speaker 2: the policy that they are relatively happy with, to rely 168 00:09:01,830 --> 00:09:05,370 Speaker 2: on the global trade side of things and to get 169 00:09:05,580 --> 00:09:08,490 Speaker 2: effectively that to achieve the growth and not go for 170 00:09:08,490 --> 00:09:11,969 Speaker 2: any massive stimulus on the property side or the consumer 171 00:09:11,969 --> 00:09:15,209 Speaker 2: side. Well, that means in an overall level is that 172 00:09:15,389 --> 00:09:18,480 Speaker 2: when we approach investment decisions, we would look at the 173 00:09:18,480 --> 00:09:22,439 Speaker 2: fundamentals, the valuations, and the technicals. The fundamentals in a 174 00:09:22,440 --> 00:09:25,890 Speaker 2: context like that are okay. In an either side of 175 00:09:25,890 --> 00:09:30,330 Speaker 2: 5%, the growth is quite good. The valuations are clearly 176 00:09:30,420 --> 00:09:32,969 Speaker 2: a lot more favorable than they were before, if you 177 00:09:32,969 --> 00:09:35,729 Speaker 2: look at where you're looking at the price earnings or 178 00:09:35,730 --> 00:09:38,880 Speaker 2: weights and indices or other things like that. But the technicals 179 00:09:38,880 --> 00:09:40,860 Speaker 2: from a market point of view have been a problem. 180 00:09:40,920 --> 00:09:43,348 Speaker 2: It has been an area where there's not been a lot 181 00:09:43,350 --> 00:09:46,740 Speaker 2: of positive sentiment from investors globally. So, back to that 182 00:09:46,740 --> 00:09:50,160 Speaker 2: point, we are continuing to be overweight the emerging markets, 183 00:09:50,400 --> 00:09:53,340 Speaker 2: but we're not being any way particularly disposed positively or 184 00:09:53,340 --> 00:09:56,429 Speaker 2: negative to China relative to that weight. The thinking being 185 00:09:56,429 --> 00:10:00,630 Speaker 2: that while the fundamentals are positive, the valuations are positive, but 186 00:10:00,630 --> 00:10:04,199 Speaker 2: that the technicals remain a risk and there's not an 187 00:10:04,200 --> 00:10:07,170 Speaker 2: obvious catalyst for that to change. And so, just the 188 00:10:07,170 --> 00:10:09,810 Speaker 2: general overweight to emerging markets seems to make sense to us. 189 00:10:10,590 --> 00:10:13,110 Speaker 1: Okay. I want to bring this discussion the full circle. 190 00:10:13,110 --> 00:10:15,960 Speaker 1: We started off, I asked you about why there has 191 00:10:15,960 --> 00:10:18,179 Speaker 1: been so much going on and you put it down 192 00:10:18,179 --> 00:10:20,759 Speaker 1: to inflation was the first thing you talked about. And 193 00:10:20,760 --> 00:10:24,660 Speaker 1: we talked about the impact inflation has had on shifts 194 00:10:24,660 --> 00:10:26,549 Speaker 1: to the right and left, and incumbency, and stuff like 195 00:10:26,549 --> 00:10:32,370 Speaker 1: that. So, 2024 will be the year of elections and 196 00:10:32,370 --> 00:10:34,500 Speaker 1: the year of inflation or the end of inflation, at least. 197 00:10:34,559 --> 00:10:37,740 Speaker 1: If we get back to more normal inflation, whatever that 198 00:10:37,740 --> 00:10:42,150 Speaker 1: is, but we're talking two, 3% range, does that settle 199 00:10:42,150 --> 00:10:46,049 Speaker 1: things down a bit? So, on the political sphere, do 200 00:10:46,049 --> 00:10:48,810 Speaker 1: you think that when people are used to two to 3% 201 00:10:49,049 --> 00:10:52,078 Speaker 1: inflation, assuming we get there, things do settle down a bit? 202 00:10:52,950 --> 00:10:56,250 Speaker 2: The political sphere, I think it takes quite a while 203 00:10:56,250 --> 00:11:00,660 Speaker 2: actually for an impact of seven, eight, 9% inflation, whatever 204 00:11:00,660 --> 00:11:03,960 Speaker 2: it is, to drop out of the consumer experience, because 205 00:11:04,020 --> 00:11:06,780 Speaker 2: you're just seeing the prices staying higher for a period 206 00:11:06,780 --> 00:11:09,358 Speaker 2: of time. It takes a long time to get used 207 00:11:09,360 --> 00:11:11,790 Speaker 2: to. So, I actually think that that will probably lead 208 00:11:11,790 --> 00:11:14,760 Speaker 2: to noise in the system for quite a while. There 209 00:11:14,760 --> 00:11:18,000 Speaker 2: will be people talking about a cost of living crisis 210 00:11:18,000 --> 00:11:21,238 Speaker 2: and experiencing a cost of living crisis. We were just 211 00:11:21,240 --> 00:11:24,120 Speaker 2: talking about it yesterday for, say in Australia, for many 212 00:11:24,179 --> 00:11:27,690 Speaker 2: super members, yes, their investment pots have had a great 213 00:11:27,690 --> 00:11:30,240 Speaker 2: year in terms of investment returns. But on a day- to- 214 00:11:30,240 --> 00:11:32,280 Speaker 2: day basis, when they go to the shops, they see 215 00:11:32,280 --> 00:11:35,340 Speaker 2: things higher than they used to be. And that's not 216 00:11:35,340 --> 00:11:38,189 Speaker 2: going to stop. It may stabilize, but it's still going 217 00:11:38,190 --> 00:11:40,259 Speaker 2: to be higher than the thing they're used to. So, 218 00:11:40,260 --> 00:11:41,729 Speaker 2: I think that noise will stay in the system for 219 00:11:41,730 --> 00:11:44,610 Speaker 2: a while. In terms of the reaction function of central 220 00:11:44,610 --> 00:11:49,860 Speaker 2: banks, though, yes, if inflation gets back to those steady 221 00:11:49,860 --> 00:11:53,130 Speaker 2: levels that they are looking for, then that will give 222 00:11:53,130 --> 00:11:56,009 Speaker 2: them the space to start easing. So, you've seen the 223 00:11:56,009 --> 00:12:00,179 Speaker 2: European Central Bank, the UK Central Bank already make their 224 00:12:00,179 --> 00:12:04,050 Speaker 2: first cut, but be then very measured about what they 225 00:12:04,050 --> 00:12:07,140 Speaker 2: will do next. The Fed, I think we will see 226 00:12:07,140 --> 00:12:09,088 Speaker 2: over the next year if things stay as they are, 227 00:12:09,090 --> 00:12:12,208 Speaker 2: particularly at the most recent weak inflation print, I think 228 00:12:12,210 --> 00:12:14,939 Speaker 2: they'll be in a position to then start easing also. 229 00:12:15,150 --> 00:12:18,389 Speaker 2: And so, I think returning to a slightly lower level 230 00:12:18,389 --> 00:12:20,880 Speaker 2: of interest rates, a more normal level of real yields 231 00:12:21,090 --> 00:12:23,790 Speaker 2: is how we would see it. We think the thing 232 00:12:23,790 --> 00:12:26,190 Speaker 2: that will enable that to happen in the US is 233 00:12:26,460 --> 00:12:30,240 Speaker 2: the labor market is getting looser, but not as in 234 00:12:30,240 --> 00:12:34,260 Speaker 2: more people are available to be employed, but not because 235 00:12:34,320 --> 00:12:37,140 Speaker 2: necessarily people are being laid off, but because there's been 236 00:12:37,140 --> 00:12:40,260 Speaker 2: an increase in people in the labor market to an 237 00:12:40,260 --> 00:12:43,800 Speaker 2: extent driven by immigration. So, in those contexts you can 238 00:12:43,800 --> 00:12:46,410 Speaker 2: get the type of soft landing that people are hoping 239 00:12:46,410 --> 00:12:49,770 Speaker 2: for. So, I think on the economic side, the rate 240 00:12:49,770 --> 00:12:52,619 Speaker 2: side, you should be in a world where inflation comes 241 00:12:52,619 --> 00:12:55,559 Speaker 2: back to those more stable levels with central banks heading 242 00:12:55,559 --> 00:12:58,950 Speaker 2: to more normal levels. And in and of itself, that 243 00:12:58,950 --> 00:13:02,069 Speaker 2: is something that leads to markets that are relatively stable. 244 00:13:02,400 --> 00:13:05,520 Speaker 2: How we're putting that into our portfolios on an ongoing 245 00:13:05,520 --> 00:13:09,030 Speaker 2: basis is we have at the margin an overweight to 246 00:13:09,030 --> 00:13:12,840 Speaker 2: equities generally, but as I said earlier, probably favoring some 247 00:13:12,840 --> 00:13:16,440 Speaker 2: of the more emerging markets areas and allocation to Japan 248 00:13:16,770 --> 00:13:18,840 Speaker 2: against developed markets in that context. 249 00:13:19,830 --> 00:13:21,509 Speaker 1: Niall, thanks for talking to Fear and Greed. 250 00:13:21,900 --> 00:13:22,709 Speaker 2: Thank you very much. 251 00:13:23,219 --> 00:13:26,909 Speaker 1: That was Niall O'Sullivan, Global Solutions Chief Investment Officer at 252 00:13:26,969 --> 00:13:29,789 Speaker 1: Mercer. This is the Fear and Greed Business Interview. Remember, 253 00:13:29,789 --> 00:13:32,580 Speaker 1: this is general information only and you should seek professional 254 00:13:32,580 --> 00:13:35,910 Speaker 1: advice before making investment decisions. Join us every morning for 255 00:13:35,910 --> 00:13:37,980 Speaker 1: the full episode of Fear and Greed, business news for 256 00:13:37,980 --> 00:13:41,010 Speaker 1: people who make their own decisions. I'm Sean Aylmer. Enjoy 257 00:13:41,010 --> 00:13:41,370 Speaker 1: your day.