UBS On-Air: Market Moves Client Strategy Office

Today we spotlight the May edition of the monthly Sustainable Investing Perspectives publication. Among the topics featured within, Amantia highlights global plastic reduction efforts, including the role companies are playing, along with the potential investment considerations from these efforts that investors should be mindful of. Featured is Amantia Muhedini, Sustainable & Impact Investing Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The UK’s May shop price index showed ongoing non-food deflation, and a slower pace of food price increases as the profit-led inflation episode wanes. Supermarkets’ dual pricing structure (offering preferential discounts to loyalty card holders) seems to be ending. Shop price data includes the discounts, consumer price data does not—and the gap between the two has disappeared.

ECB Chief Economist Lane stated the central bank is ready to cut rates. We have heard this from other ECB governing council members, but Lane’s remarks come with the added authority and insight that only a chief economist can bring. Europe has (on a like-for-like basis) the same inflation as the US or the UK, and the ECB is not known for the speed of its decision-making. That the ECB looks to be first to cut rates may be due to the narrative around European growth, rather than the substance of economic data.

Solita Marcelli, CIO Americas of UBS, along with Jeffery Gundlach CEO of DoubleLine, share valuable insights and perspectives on the current investment landscape.

Japan’s April consumer price inflation was a little dull—the inflation rate slowed more or less as expected, as food prices offered disinflation. Some sources of inflation are probably not domestic in origin—although the rate has moderated, hotel price inflation remains close to 20% y/y. Very strong foreign tourist numbers helped push up those prices.

US President Clinton’s admonition “It’s the economy, stupid” puts economists in their proper (superior) place. But which economy? Economists get excited about inflation, but voters think in terms of price levels—a higher price level can be considered unfair even as inflation falls. GDP is too abstract for voters, who do not care whether “growth” is -0.1% or +0.1%. Economic perceptions (honest perceptions, not sentiment surveys) drive politics.