Asks how frequently base case is reassessed given fast-moving Iran conflict and market whipsawing.
Anna
Grace Peters
Base case: oil around $80-$100 supports global positive growth; risk assets can do well. Risk scenario: oil >$140 leads to recession, Fed cuts ~100bps.
Investors whipsawed between escalatory headlines and valuations (S&P at 19.3x).
Asks if central banks will hike on inflation then cut rapidly on growth concerns.
Anna
Grace Peters
ECB and BoE may need to hike due to swift inflation pass-through; Fed likely on hold. Inflation volatility is key theme; portfolios not prepared for security issues, economic nationalism (inflationary).
Long-term inflation expectations anchored; deficit spending concerns may re-emerge.
Asks if energy prices threaten AI productivity gains.
Anna
Grace Peters
Energy prices may threaten margins for European/UK companies, but AI productivity gains support corporate margins; maintains positive equity view.
Market focused on inflation dynamics; complacent on deficit concerns.
Grace Peters
Tactical opportunities: 1) Lock in front-end rates if market switches from inflation to growth focus; 2) Gold as good asset given geopolitics and deficit spending not going away.
Gold down ~10% from peaks; clients still in cash.
Asks about bond markets and whether deficit concerns could push yields up again.
Anna
Grace Peters
Curve steepening likely in US; small hike priced in, Fed on hold, political pressure to cut if growth weakens. Prefers 3-6 year maturities.
Long-term inflation expectations anchored; longer-term steepening from repricing of inflation and deficit.
Asks if investment becoming more geographically ring-fenced due to fragmentation.
Anna
Grace Peters
More a rebalancing from overweight US assets; portfolio shift needed toward alternatives: real assets (infrastructure), hedge funds (10% allocation), hard assets (gold).
Gold has structural story to appreciate over next 12 months.