Quarterly Investment Review – Q3 2021
“Interest rates are to the value of assets what gravity is to matter.”
Warren Buffett, 1 May 2021
Markets moved sideways during the last quarter, against a poor background of international news. The chaotic exit of Allied troops from Afghanistan, the continued crackdown on some sectors of their economy by the Chinese Communist Party and a brewing energy crisis, all made for a poor backdrop. The stubborn persistence of Covid due to the Delta variant also delayed the reopening of economies. Covid’s impact is underlined by the fact that more Americans have died from it than were killed in action in World War II, Korean and Vietnam wars combined. In contrast markets have been bolstered by strong corporate earnings, and government and central bank policy has continued to be extremely supportive.
As we head into the fourth quarter market performance is likely to be determined by the pace of the recovery from the Covid pandemic and progress with vaccine development and its rollout, and by the extent to which inflation remains under control. If inflation does rise then the pressure to raise interest rates will increase and as the Buffett quote at the top of the page indicates that would exert downward pressure on many asset prices. So will the inflation tiger pounce?
Much of the current debate on inflation focuses on the extent to which it is transitory or something more permanent. Clearly some of it is transitory and the result of the supply chain disruption caused by the various lockdowns. These bottleneck issues will resolve. However some inflation looks more structural.
Click here to download the full document.
Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only.
References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS Partners provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data, quotes, research notes or other financial instrument referred to in this document.
This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer.
Additional information is available on request. © NS Partners Group