TopPicks from Mike Philbrick, chief executive officer, ReSolve Asset Management
MARKET OUTLOOK:
The global economy is currently facing a complex intersection of macroeconomic headwinds and technology tailwinds, which has given rise to two major themes in today's investor zeitgeist. As globalization, automation, and other macroeconomic forces continue to shape our world, technology advancements, particularly in artificial intelligence, promise transformative impact across industries.
Over the previous decades, globalization and automation have driven significant shifts, with manufacturing jobs moving to cheaper countries and productivity gains achieved through automation. These developments have fuelled company profits and deflationary pressures, allowing central banks to provide substantial liquidity to the global economy during times of duress without fear of creating inflation.
Conversely, the growth of AI presents technology tailwinds that offer disruptive potential across sectors and labour markets. AI's transformative power could reshape industries, boost productivity, and fuel economic growth. Estimates from OpenAI and Goldman Sachs highlight the far-reaching impact of AI on the labour market, surpassing the effects of globalization and automation.
In the midst of these macroeconomic and technological forces, the specter of increased inflation volatility looms large. Current market valuations are based on the anticipation of a modest economic slowdown and a return to more stable levels of inflation. However, central banks may face a different and intricate challenge of navigating monetary policy in a new paradigm where the persistent backdrop was deflation.
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