Some of the multitude of ECB policy makers have been signalling a rate hike next week, with the possibility of 0.5 percentage points. This follows from the Belgian central bank governor saying (essentially) “never mind the profit margins, hike until real wages become even more negative.” ECB policy making is faction-riven, but there appears to be some difficulty in turning off the hiking autopilot.

As we recognize Earth Day, we reflect on some good news as it relates to progress made across multiple energy production and consumption fronts over the past year. We also touch on some investment opportunities associated with these energy-related innovations. Featured are Michelle Laliberte, Thematic Investing Strategist Americas, and Jay Dobson, Energy and Utilities Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Our conversation outlines the current market dynamic and what sentiment seems to suggest about the outlook for the US economy. We also discuss the scenarios CIO sees unfolding as it relates to growth, inflation, and monetary policy. Plus, review the current asset allocation guidance from CIO. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The data calendar is quiet, with only some surveys (which should never be taken too seriously). The Dallas Fed manufacturing survey is worth a glance, but only for the comments section. Anyone who believes in rational economic agents, objectively filling in survey forms based on their quantifiable economic experiences is advised to read the comments section of the Dallas Fed. It normally demonstrates political partisanship and economic prejudice.

Featuring Dominic Schagar, Senior Equity Investment Specialist, Adam Scheiner, Senior Portfolio Manager on the Private Client US Equity Team, and Nadia Lovell, CIO Senior US Equity Strategist, with a focus on the UBS Tactical US Equity Themes SMA.

Our conversation recaps the beginning of the Q1 corporate earnings season and outlines expectations for earnings growth in coming quarters. We also provide some takeaways from the Fed’s Beige Book, and preview what you can expect in the week ahead. Featured is Matt Tormey, Equity Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

South Korea’s early April export data improved compared to March, and overall looks like it has reached a trough. This suggests that the global economic slowdown should not be too severe. Obviously the hedonistic orgy of spending on goods in 2021 was never going to last, but consumers have not entirely given up on buying things.

Federal Reserve President Williams said banks were fine, but bank lending standards might tighten. This may reflect structural changes. Recent events shifted the dynamics of bank runs. Academic analysis suggests the social media echo chamber helped promote deposit flight, and digital banking makes deposit flight faster. Over the longer term, banks may tighten lending standards to deal with these threats.

Our conversation focuses on hedge fund investing, including why an allocation should be considered in the current market environment, how to think about incorporating hedge funds into a diversified investment portfolio, the risks to be mindful of, among other points of interest. Featured are Dan Scansaroli, Head of Portfolio Strategy and UBS Wealth Way Solutions Americas, and Sean Sanborn, Hedge Fund Strategist, CIO Americas. Host: Daniel Cassidy

Jordi Visser is the President and Chief Investment Officer of Weiss Multi-Strategy Advisers, whom has a passion for both investing and horse racing. We discuss how these two worlds intersect, Jordi’s process for investment selection and where he sees both risks and opportunities across regions and asset classes. Host: Daniel Cassidy

UK inflation data slowed more slowly than had been expected. Food prices are rising at an astonishing 19.2% y/y (cake prices are partly to blame, it seems). This inflation has little to do with farmers, and as profit-led inflation, this is likely to be an increasing political focus. French finance minister Le Maire made strong comments on profit-led food price increases yesterday. UK consumer durable goods disinflation and energy price disinflation continues.

As expected, China’s first quarter GDP was better than expected. Beijing’s rush to emphasize exports a few weeks ago may have helped flatter the numbers. Higher-frequency data showed consumers spending more, but continuing to save more as well. The spending data was helped by restaurant spending—the international spillover from service sector spending is not zero, but certainly less than spending on goods.

Our conversation draws parallels to market performance at the start of 2023, and that which investors have experienced in recent weeks, and what might it all mean for the near-to-medium term market outlook. We examine why markets might be vulnerable to a pullback and how to position your portfolio accordingly. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

We hear from ECB President Lagarde. President Lagarde’s public comments do not normally contain much novelty or insight for investors. Recent ECB speakers have tended to highlight divisions, and it seems that rate hikes will continue on autopilot until the data makes it very obvious that this is a bad idea.

Our conversation recaps the week that was, including thoughts around the March inflation prints and implications to US monetary policy. We also touch on the prosects for the USD remaining as the world’s centric currency, and preview what you can expect in the week ahead. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Shiavon Chatman.

Our conversation outlines opportunities across sustainable fixed income (such as green bonds), the recent IPCC report on climate change, and investing through social themes. Featured are Amantia Muhedini, Sustainable and Impact Investing Strategist Americas with the UBS Chief Investment Office, and Lucy Thomas, Head of Sustainable Investing with UBS Asset Management. Host: Daniel Cassidy

Yesterday’s US producer price inflation rate slowed, consistent with the profit-led inflation narrative. The transitory demand-led consumer durable goods inflation and the supply-led energy inflation have both receded into disinflation; both matter to producer prices. Profit-led inflation occurs more frequently at the end of the supply chain, affecting consumer prices more than producer prices.

Sebastian Mainegra, Investment Specialist, UBS Asset Management, spoke with UBS On-Air host Dan Cassidy about the importance of year-round tax management and how the Personalized Tax Management solution from UBS Asset Management seeks to offset the impact of capital gains taxes

Our conversation updates you on the CIO investment theme, including a look at the investment case and performance potential of the theme. Featured is Donald McLauchlan, Emerging Markets Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

The Federal Reserve minutes suggested some members felt that relentlessly hiking rates—without ever pausing to understand the consequences—might not be the best possible strategy. Fed Chair Powell’s maniacal chant on “hike, hike, hike” drowned out such rational ideas. Reports of the minutes have stressed the staff economists’ “mild recession” view. “Mild recession” is not really defined.

Our conversation examines the current environment for equity investors against a backdrop of macro uncertainty. We dive into the factors that could drive return through the balance of the year, preview the Q1 corporate earnings season, and discuss how to position within the asset class. Featured is Joe Amato, President of the Neuberger Berman Group, and Chief Investment Officer for Equities, as well as David Lefkowitz, Head of Equities Americas with the UBS Chief Investment Office. Host: Daniel Cassidy

Learn about how to prepare for the aspects of retirement, beyond the financial. Featured are Katie Williams, Discovery Strategist Americas, and Ainsley Carbone, Total Wealth Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US consumer price inflation is expected to slow (month-over-month). Uncertainty comes from volatile used car prices (which do not affect most US households) and the fictitious Owners’ Equivalent Rent (which affects no US households at all). Housing costs will be disinflationary this year, but the timing is difficult.

With markets in search of the next narrative (as the banking crisis eases), we examine the factors that are likely to drive investment sentiment and market activity over the next few months, and how to position your portfolio accordingly. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s March inflation data slowed further. Consumer price inflation was lower, and producer price deflation is coming in ever more negative. As China’s inflation data is a parochial affair, this has no read-through to inflation elsewhere in the world. It seems that, unlike some developed economies, China is not experiencing profit-led inflation and unusual margin expansion.

Our conversation examines the current landscape for emerging market investors, including a recap of what was an eventful March. We discuss the implications to emerging market assets, and some considerations when it comes to positioning your portfolio. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Featuring Jason Draho, Head of Asset Allocation CIO Americas, and Nadia Lovell, Senior US Equity Strategist CIO Americas

In this episode, we cover wealth planning strategies based on key changes from the SECURE 2.0 Act that impact the retirement assets of clients. Erik Seeney, Wealth Planning Strategist, UBS is joined by Ainsley Carbone, Total Wealth Strategist, UBS who will share best practices regarding: Increasing the age for required minimum distributions (RMDs). Strategies for reducing the tax burden on retirement assets. Understanding the pros and cons of delaying distributions from retirement accounts.

The World Trade Organisation has warned of “sub-par” trade growth this year, and with a rather naïve optimism, it has urged multilateral collaboration in response. There is one cyclical and two structural reasons for trade to slow. Cyclically, the immediate post-pandemic era had a surge in spending on goods rather than services. Goods are traded more than services, so that boosted trade to a record share of the economy last year. As spending on goods and services normalizes, trade is likely to fall as a share of the economy.

Our conversation examines the current landscape for muni investors, including the performance implications of the recent banking crisis and the path forward for monetary policy. We also touch on investment themes and positioning considerations within the asset class. Featured are Jeremy Jenkins, Director of Relationship Management, Breckinridge Capital Advisors, and Kathleen McNamara, Senior Municipal Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Europe is offering some insight into the manufacturing sector, with (among other indicators) German factory orders and French industrial production. Manufacturing is unlikely to be representative of the overall economy. Despite lurid tales of supply chains lying in shattered ruins around the world, manufacturing output has kept breaking records over the past couple of years. Now, however, the demand for goods is definitely moderating.

With 1Q23 behind us, we reflect on the drivers behind quarterly market performance and how unexpected events have impacted CIO’s market outlook for the balance of the year. We also touch on why the outlook for growth, inflation, and monetary policy is slow burn lower on all fronts, rather than a quick sharp change. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

When economies go through structural upheaval, inevitably some people win and some lose. The causes of this are complex, but people tend to prefer simplicity over complexity—and look for a single scapegoat to blame. Foreigners make an ideal scapegoat. Sino-US relations represent this trend. The US is complaining about “unfair” Chinese national champions. China is complaining about US-led efforts to “suppress” China. Scapegoating distracts from more serious structural problems in each economy.

The oil cartel OPEC announced a 1 million barrel per day production cut (an announcement is not the same thing as reality). The oil price has risen in response, and at the moment is back to where it was 20 days ago. At these levels, energy prices remain a disinflation force, as the price is significantly lower than it was a year ago.

The fourth industrial revolution is a significant structural upheaval—and structural change tends to encourage scapegoat economics and prejudice politics. Those trends have been on display this week, in the form of economic nationalism. The US Congress is terrified China will uncover the secrets of how to dance on TikTok. China’s trade envoy was warning Europe not to follow US trade sanctions. Europe will pursue its own economic nationalist course, no doubt.

As our ‘Year of Inflections’ continues to evolve, events over the past month have shown how quickly the outlook can shift. With uncertainty in the banking sector still high, and question marks about the economic and central bank outlook, markets are likely to remain volatile in the months ahead. Against this backdrop, we focus on strategies that are building resilience, mitigating risks, positioning for opportunities created by regional divergences, and diversifying portfolios.

Spain and Germany issue initial estimates for March consumer price inflation. These numbers are likely to slow quite significantly (especially for the year-over-year comparison). The second wave of inflation—energy prices—starts to drop out of the calculation. What is left is profit margin-led inflation (if companies earned normal profit margins, there is little question inflation would be meaningfully lower).

Our conversation outlines the investment case for commodities and areas of opportunity for consideration. We dive deep into where we are in the commodities cycle, how to invest in the asset class, and the risks to be mindful of. Featured are Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and Al Chu, Portfolio Manager with Newton Investment Management (BNY Mellon). Host: Daniel Cassidy

Swedish supermarkets are cutting food prices, after growing concerns about the extent of (profit-led) inflation. This is not just slower inflation, but outright deflation with price increases and profit margin expansions being reversed. It follows similar moves in Norway last month. If consumers are no longer prepared to live in a pricing power fairy tale, believing the stories retailers tell to justify margin expansion, disinflation or deflation can swiftly follow.

The UK British Retail Consortium's shop price index rose on food prices. The accompanying commentary was textbook for profit-led inflation. Poor harvests and sugar prices were blamed. When profits (rather than demand) lead inflation, retailers need to have a story that convinces consumers that the price increases are "fair". Consumers mistakenly think food prices are related to agricultural prices, which conveniently hides things like the 50% increase in the markup on consumer milk prices in recent months.

As we embark on a new week, we take a temperature on investor sentiment and discuss a near-term market outlook. We also outline the latest asset allocation recommendations from the UBS Chief Investment Office, and examine the road ahead of monetary policy. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Economics now enters a limbo period. The data flow that we get over the next few weeks relates to the period before the recent financial volatility. There is considerable uncertainty over how the real economy is affected by that volatility. The optimistic case is that larger banks do not tighten bank lending standards dramatically, and consumers carry on more or less as before. The pessimistic case is that lending standards tighten, consumers are forced to spend using only their falling real wages, and fear of unemployment constrains consumption further.

What have we learned this week? Remarkably little. Economists have been wrestling with real-time economic data that has become progressively less reliable as structural change has swept the economy. Now the aftermath of the first bank runs of the Twitter era only adds uncertainty. The future depends on two hard-to-predict behaviors: will bank investors and depositors keep moving their money? And if they do, will loan officers respond by tightening lending standards? Central banks will know what is happening before markets do.

Our conversation recaps this week’s notable summit in Moscow, the Congressional testimony delivered by the TikTok’s CEO, rumblings surrounding an increase to the FDIC insurance cap and more. Featured is Shane Lieberman, Federal Affairs Manager, UBS US Office of Public Policy. Host: Daniel Cassidy

The Federal Reserve raised rates 0.25% yesterday, as expected. Fed Chair Powell signaled they may be close to the end of the rate hiking cycle—acknowledging stricter bank lending standards are a form of tightening. Arguably the longest policy error since New York Fed President Strong in the 1920s is nearly over (the error was not the rate hikes, but the fanatical "hike, hike, hike" mentality without pausing to assess the damage being done).

Our conversation outlines developments surrounding the EU’s Green Deal Industrial Plan, outlines the progression of ‘green transportation’ and touches on the global rise in energy prices and the role renewables can play. Featured are Amantia Muhedini, Sustainable and Impact Investing Strategist Americas with the UBS Chief Investment Office, and Jens Peers, Chief Executive Officer and Chief Investment Officer of Mirova. Host: Daniel Cassidy

Our conversation outlines the current longer-term thematic preferences of the UBS Chief Investment Office, including a look at two recent additions, ‘Aging in comfort’ and ‘Education services’. Featured is Michelle Laliberte, Thematic Investing Strategist, UBS Chief Investment Office. Host: Daniel Cassidy

The Federal Reserve delivers its policy decision today. Estimates of the outcome should not be described as forecasts—economists can only guess at what will happen. The fact that we are guessing policy for the world’s reserve currency is the result of the Powell Fed’s comedy of errors.