Economic and Market Commentary

What Keeps You Up at Night?

PIMCO experts and Dr. Ben Bernanke, senior advisor to PIMCO, discuss the main risks they’re concerned about over the cyclical horizon.

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Text on screen: PIMCO

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Text on screen: Tina Adatia, Fixed Income Strategist

Tina Adatia: Dr. Bernanke, we'll start with you, but we'll go through everyone. What keeps you up at night or in other words, what is the main risk you're worried about today?

Text on screen: Dr. Ben Bernanke, Chair of PIMCO Global Advisor Board, Former Federal Reserve Chairman

Dr. Ben Bernanke: Inflation is both too high and too low is a concern that we need to be paying close attention to. And I think we live in a multipolar world where the United States doesn't dominate the way it did in the media post-war era. And I don't think we should forget about the geopolitical issues that are out there. In Hong Kong and Taiwan, in Iran and elsewhere, markets tend to ignore those political issues until suddenly they become non ignorable. So I think we have to keep an eye on those things as well.

Tina Adatia: Thank you. Joachim, let's go to you.

Text on screen: Joachim Fels, Global Economic Advisor

Joachim Fels: Yeah. Somewhat related to what we just heard from Dr. Bernanke. So, I worry that one of the longer term consequences of this pandemic is going to be a further rise in populism and economic and other forms of nationalism. Several governments, particularly in Europe, have not handled this pandemic very well. Some countries are really lagging behind on vaccine distribution. The lockdowns are leading to more and more protests from people who refuse to wear masks and so on. So I think you may see a backlash over the next couple of years with more support for populist parties and populist candidates. Also we've seen an increase in wealth inequality. I mean, financial markets have rallied massively over the past year, but not everybody is participating in this increase in wealth and rising inequality is one of the underlying drivers for populism.

Tina Adatia: And Marc, to you.

Text on screen: Marc Seidner, CIO  Non-Traditional Strategies

Marc Seidner: Complacency , Complacency keeps me up at night. Everyone who is on this call knows the recent headlines that are becoming a little bit too frequent in terms of accidents, investor accidents. And we cannot be too complacent in this environment. Fortunately, none of them have become systemic of nature, but I think we have to recognize that if there is a high level of complacency, that accidents will continue and the risk is ever present that something becomes systemic.

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DISCLOSURE


IMPORTANT NOTICE

Please note that the following contains the opinions of the manager as of the date noted and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.

The continued long term impact of COVID-19 on credit markets and global economic activity remains uncertain as events such as development of treatments, government actions, and other economic factors evolve. The views expressed are as of the date recorded, and may not reflect recent market developments.

\All investments contain risk and may lose value.

Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not be construed as an estimate or promise of results that a client portfolio may achieve.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

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CMR2021-0422-1617530

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