Mackenzie Minute: November 16, 2018
Paul Musson, Head of the Mackenzie Ivy Team, shares his thoughts on rising interest rates, trade wars, tariffs and record global debt.
PAUL MUSSON: The first one is obviously is the Trump trade tariffs and the trade war with China, which is having an impact obviously on global trade and slowing global trade. The other thing that we’re monitoring is quantitative tightening, which is essentially the Federal Reserve actually shrinking its balance sheet after years of increasing the money supply at a pretty rapid rate.
There are a number of events we are keeping an eye on. The first one obviously is the Trump trade tariffs and trade war with China. There’s a G20 event coming up at the end of this month, maybe things will get resolved then, we are not sure. But on top of that, you have quantitative tightening, where the Federal Reserve was actually shrinking its balance sheet after years of expanding it. You have rising interest rates. You have what we think are still very rich valuations of all asset categories. And finally, you have record debt globally.
With all this global volatility our products, the Ivy funds, are impacted just like everybody else is. But typically, we are impacted less because we have companies that have sustainable and strong competitive advantages. They have strong balance sheets and we are also very careful with respect to valuations so when we can’t find the investment opportunities out there, we will hold cash. Of course, the whole point of this is to get our clients to whatever their long-term financial goals are. And given the current positioning of the Ivy funds and the strength of the Ivy team, I’m more confident that ever than we’ll be able to achieve just that.