Apr 5, 2023
In this episode, we dive deep into strategies for building robust market forecasts with Gerry Fowler, CFA, Head of European Equity Strategy and Global Derivative Strategy at UBS. We discuss the importance of leading indicators in understanding potential future outcomes for market and business cycles, as well as the impact of rising interest rates on corporate profitability and the potential economic ramifications. We also explore how harnessing your strengths and leaning into them can lead to a successful career. Join us as we uncover the secrets to navigating the ever-changing financial landscape and making the most of the opportunities it presents.
Chapters:
(0:00:00) - Building Market Forecasts
(0:14:13) - Navigating Interest Rates
(0:21:16) - Harnessing Strengths to Succeed in Career
Chapter Summaries:
(0:00:00) - Building Market Forecasts (14 Minutes)
In this episode, we explore strategies for building more robust
market forecasts with Gerry Fowler, CFA, Head of European Equity
Strategy and Global Derivative Strategy at UBS. We discuss the
importance of leading indicators in understanding potential future
outcomes for market and business cycles. By examining these
indicators, investors can gain insight into the expansion,
slowdown, contraction, and recovery phases of the business cycle.
Fowler highlights the importance of macro regime distributions,
which help identify how market performance, profits, and valuations
cluster around the business cycle. He emphasizes the need for
humility when interpreting leading indicators, as they are often
mere guesses with inherent errors.
(0:14:13) - Navigating Interest Rates (7 Minutes)
We discuss the impact of rising interest rates on corporate
profitability and the potential economic ramifications. Despite
healthy jobs growth and elevated inflation figures, there are signs
that the tightening of credit standards and weakening demand for
credit will affect profitability. The lag effect of rate hikes and
the hidden credit tightening in private enterprise, along with the
increase in bankruptcies, suggests that there may be a need to
brace for a potential economic downturn. The conversation also
touches on the Federal Reserve's potential pivot to a more dovish
position, the likelihood of a recession starting in the third
quarter of this year, and the expectation of aggressive rate cuts
from the fourth quarter.
(0:21:16) - Harnessing Strengths to Succeed in Career (2
Minutes)
Reflecting on my career in finance, I recall my first job at
Salomon's with Barney in Australia and my journey into derivatives
strategy and portfolio management. I discuss the importance of
knowing one's strengths and leaning into them for success.
Additionally, I emphasize the value of becoming a specialist while
maintaining a broad network of colleagues, competitors, and
providers for a well-rounded perspective as you progress in your
career.