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ASR on Bloomberg: ‘How to Invest $10,000 Right Now’

Ella Rathgeber

18th JUL. 2023

In Bloomberg’s recent article, Ian Harnett is one of four experts selected to share his ideas on today’s best investment opportunities. With present economic uncertainty, Ian gives a unique perspective to the areas where there might be the right mix of risk and reward.

The Idea:

“We expect US and global economies to fall into recession later this year... Slowing growth will likely see headline inflation fall, boosting the outlook for US Treasury bonds and defensive equities such as food and beverage stocks, pharmaceuticals and utilities… Lower inflation also means weaker pricing power, falling earnings and rising unemployment, which tend to undermine cyclical stocks, including the high-valuation US technology plays.”

The Strategy:

“With inflation coming down and activity slowing, 5-year US Treasuries, which currently yield about 4%, look attractive. We would also look to gain some protection to the low level of ‘risk’ price into the markets by buying a volatility (VIX)-related ETF. Just eight large tech companies account for 75% of the gains in the S&P 500 since the start of the year, driven by hype about the prospect of AI. We believe this optimism is now overdone.”

The Big Picture:

“Tighter bank lending strategies would typically lead to slower credit growth up to a year later, suggesting the real credit crunch has not yet started… More than 50% of global financial assets are controlled by non-bank financials, such as private credit, private equity, and fintech. Many of these new growth areas of finance have business and funding models untested for a world of higher rates and reduced liquidity availability, and we expect market volatility to rise by year-end.”

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