The UK general election result is now clear (for the benefit of US readers, many countries are able to get a definitive result within hours of voting having concluded). The result was entirely as expected by markets, with the Labour Party winning a sizable majority. Former Prime Minister Truss (who presided over the Truss debacle in markets) lost her seat.

US markets are closed as the country celebrates its attempt to escape rule by a monarch. There has been media speculation about US President Biden’s candidacy for re-election. Markets are not likely to react to such speculation at this stage. Politically, markets primarily focus on the probabilities of economic policy change.

Federal Reserve Chair Powell said yesterday that the strength of the US economy and labor market meant the Fed could take its time in cutting rates. This is a rather risky point of view. US inflation has collapsed more than eight percentage points, and the harmonized measure is below 2%. Taking time means tightening policy further. Can the US economy withstand more tightening?

The British Retail Consortium shop price index (measuring prices in selected stores in the UK) sank to a 0.2% y/y rate. Is this the end of profit-led inflation? Profit-led inflation occurs when retailers use a dominant narrative to disguise profit increases when raising prices. However, at some point, price increases become the dominant narrative and consumer rebellion defeats margin expansion.

The first round of the French elections produced results broadly in line with opinion polls (as to the popular vote). An unusually large number of second-round votes could be three-way contests. That makes the final outcome harder to predict. In the past, there has been a “front républicain” with third-placed moderate candidates withdrawing to increase the chances of defeating a more extreme party (in this election, the Rassemblement National). It is not clear how many constituencies will follow such a strategy.

Polls immediately after the US presidential debate declared former President Trump the winner. While incumbents often “lose” debates, US President Biden reportedly lost by a large margin. This invites increased investor scrutiny of Trump’s policies, especially around trade. The economic consequences of tariffs are relatively obvious, but there is uncertainty about how many campaign pledges will translate into policy action.

On this week’s episode of Viewpoints, Burkhard spends time reviewing an abundance of global election-related developments, including thoughts around Thursday’s US Presidential debate, along with upcoming snap elections in both the UK and France. Burkhard explains the impact of these developments to markets, along with offers guidance as to how investors should navigate through election-induced market volatility.

For this week, Shane previews the highly anticipated debate between President Biden, and former-President Trump, including a review of the rules and conditions. We also spend time reviewing likely areas of focus and the issues on the minds of the American voter. Plus, examine what the latest national and swing-state polling is pointing to. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

Our conversation revisits the emerging markets as we discuss how the asset class has evolved in recent years, performance expectations for the asset class through year-end, and considerations when it comes to portfolio positioning. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Officer. Host: Daniel Cassidy

US first quarter GDP is revised, and will keep being revised; we will not have a clear picture of current GDP performance for five years or more. Markets will pay some attention to prices from the personal consumer expenditure deflator, but May data is due tomorrow. Politicians use GDP as a weapon or a rallying cry, but GDP is so far from real world living standards that voters do not care whether growth is reported as 1.4% or 1.3%.

Our conversation revisits the possibility of a ‘Roaring 20s’-style economy to take shape in the US, as we review the updated assessment of such a scenario from the UBS Chief Investment Office. Featured is Jason Draho, Head of Asset Allocation Americas, and Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

A monthly check on US equity market performance and positioning considerations with Jeremy Zirin, Senior Portfolio Manager, and Head of the Private Client US Equity Team, and Dominic Schagar, Senior Equity Investment Specialist with UBS Asset Management.

There are several ECB speakers on the agenda today. One speaker, Rehn, has already suggested that two further rate cuts are a reasonable estimate for ECB action this year. This is in line with most economists’ views.

Our conversation today focuses on the current election cycle as it relates to the potential impacts of political bias when it comes to financial decision making, and how to navigate accordingly. Featured are Justin Waring, Senior Total Wealth Strategist, and Ainsley Carbone, Retirement Strategist, from the UBS Chief Investment Office. Host: Daniel Cassidy

Jay Dobson is joined by Dave Intoppa for an in-depth conversation about where we are in the energy transition story, including a look at technological innovations, investment considerations, and what to expect in the years (and decades) ahead. Featured are Jay Dobson, Energy and Utilities Sector Strategist Americas, with the UBS Chief Investment Office, and Dave Intoppa, Portfolio Manager, at Newton Investment Management (BNY Investments). Host: Daniel Cassidy

In the absence of interesting data, markets focus on less important things, like politics. France has a political debate between current Prime Minister Attal, Rassemblement National president Bardella, and Nouveau Front Populaire leader Bompard. Presumably they will promise voters everything that they desire, without explaining how it will be paid for. Some plans are estimated to cost two Trusses (4% of GDP of unfunded commitments). The reality of government is likely to moderate such plans.

In a special session from Singapore, Chief Investment Officer Mark Haefele is joined by Min Lan Tan, Head CIO of APAC, Paul Donovan, Chief Economist, and Sundeep Gantori, Equity Strategist, to discuss our outlook for the second half of the year and provide recommendations for investors.

This week, Jason outlines the events that are set to take place that will not only determine the investment landscape through year-end, though also shape expectations for 2025. We also review the current asset allocation recommendations from CIO. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

For this month we focus on the 2024 proxy season, including a review of expectations, a look at some notable trends and themes, along with comparisons to what 2023 delivered. Featured are Amantia Muhedini, Sustainable & Impact Investing Strategist Americas, UBS Chief Investment Office, and Amy O’Brien, Global Head of Responsible Investing with Nuveen. Host: Daniel Cassidy

This week has a lot of politics in it, and markets are rarely that good at pricing political risk. The US presidential debate may make investors pay attention to political risk earlier than is normal in the US political cycle. Because so much attention has focused on the suitability of the candidates for office (rather than their policy positions), this debate might actually matter.

This week we follow-up on rulings issued by the Supreme Court, including US tax on foreign business income. Shane also provides some takeaways from the recent G7 Summit, and touches on this year’s focuses and themes. Plus, some background on the Russia-North Korea military pact and the global implications. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

Yesterday’s central bank decisions support the trend of following inflation lower. The Swiss rate cut reflected a desire to stabilize real rates, not stimulate the economy. Bank of England Governor Bailey linked future rate cuts to lower inflation; an August rate cut looks increasingly likely. Only the Federal Reserve seems to have forgotten that rising real rates are repressive.

With the halfway point of 2024 having arrived, we reflect on how market and macro conditions have evolved thus far, and share expectations for the balance of the year. Plus, we outline positioning recommendations across equities, fixed income, and alternatives. Featured are Jason Draho, Head of Asset Allocation Americas, Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, and Nadia Lovell, Senior US Equity Strategist. Host: Daniel Cassidy

The Bank of England offers some excitement as investors await the start of the UK interest rate easing cycle. That start is probably not today, but should be soon. The BoE relishes dissent and discussion to help form higher quality decisions (the Federal Reserve might like to take note), making policy outcomes less predictable. With consumer price inflation down nine percentage points from the recent highs, the case for lowering real interest rates is strong—but the BoE might want a couple more data points before acting.

May UK inflation data was as expected across the multiple measures released today. Headline consumer price inflation was 2%. The decline in inflation has almost nothing to do with government policy, and not that much to do with the Bank of England—a lot of this is the natural slowing of temporary inflation drivers. Durable goods prices sank further into deflation.

Eurozone final May consumer price inflation is very unlikely to change from the initial report. At 2.6% y/y, the rate is above the ECB’s target, but rate cuts are still justified. Inflation has fallen eight percentage points from its high. The impact of that on real interest rates is significant.

This week Jason ‘connects the dots’ to make sense of market performance, this in the wake of last week’s inflation data, along with the outcome of the June FOMC meeting. We also consider emerging geopolitical risks, and upcoming macro factors. Plus, share CIO’s current investment outlook and positioning recommendations. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s May data dump showed weaker-than-expected industrial production, despite earlier reports of stronger exports. Domestic retail sales were stronger, slightly distorted by the timing of holidays. Restaurant sales were stronger, as people seem inclined to spend on having fun.

Yesterday’s US producer price inflation numbers added to a general sense of disinflation. However, the lower inflation reported in consumer and producer prices will not be fully experienced by consumers. The slowing fantasy price of owners’ equivalent rent does not affect real world spending power. Seasonal adjustments deliberately distort reality, and so disinflation here does not change consumers’ inflation experiences.

This week Shane highlights a slate of rulings expected to be delivered in June by the Supreme Court, updates on the campaign trail (including recent and upcoming primaries), reflects on former President Trump’s visit to Capitol Hill - plus, recaps the annual Congressional baseball game! Featured is Shane Lieberman, Senior Governmental Affairs Advisors, Governmental Affairs US. Host: Daniel Cassidy

On this week’s episode of Viewpoints, Burkhard covers a range of topics, including a potential timeline for higher for longer rates in the US, the gathering of world leaders at the G7 Summit, how the law of acceleration will change the world and economies over the next decade, and more.

The Federal Reserve did nothing on rates. Investors have desperately sought additional guidance on policy, putting the fabled dot plots in focus. These black smudges on a piece of paper are really not that helpful. More Fed members think that there will be two cuts this year than anything else. Given the disinflation forces in the economy, several of those who suggested one cut likely give a high probability to two cuts.

Join Jason Draho, Head of Asset Allocation Americas, and Brian Rose, Senior Economist Americas, for thoughts and reflections on May inflation data, along with the outcome of the FOMC meeting. Jason also speaks to the market response, and shares CIO’s positioning recommendations. Host: Daniel Cassidy

Economists are overstimulated by the US today. We have the excitement of US consumer price inflation. We have the excitement of a Federal Reserve policy decision. Fed Chair Powell’s press conference can be relied upon to dampen economists’ passions. The Fed is unlikely to change policy. The fabled dot plots of policy projections will add confusion (a black mark on a chart gives no sense of confidence or risk).

As mid-year approaches, we take time to reflect on fixed income performance drivers over 1H24, along with preview performance expectations for the balance of the year. We also outline expectations for monetary policy and rates, along with review positioning recommendations across fixed income. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, and John Murtagh, Fixed Income Analyst Americas. Host: Daniel Cassidy

Financial markets dislike any increase in uncertainty. Politics in Europe was judged to have increased uncertainty, and markets responded accordingly. It is the change in uncertainty that matters. The outcomes of the thousands of US elections held this November are also a source of considerable uncertainty, but, perceptions of that level of uncertainty are not changing very much.

With growth fears last week having eased, investor confidence in a soft-landing having been reinforced, and the S&P 500 having hit an all-time-high, Jason explains why the story is likely to continue this week with the May inflation data and the FOMC meeting. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

In any society experiencing a period of economic upheaval, some people do better while others do worse. The causes are complex, but those suffering want a simple explanation. This encourages scapegoat economics—blaming economic problems on a minority group. Scapegoat economics encourages prejudice politics, where politicians promise everything will be OK if that group can only be excluded. This helps explain the extremists’ success in the European elections.

Hear the latest thinking and investment recommendations from the UBS Chief Investment Office with Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, and David Lefkowitz, Head of Equities Americas.

As we close out another trading week, Brian Rose recaps the May employment data and provides a health check on the US labor market. We also preview next week’s FOMC meeting, along with some other points of interest on the US data calendar. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

As expected, the ECB offered a 0.25-percentage-point rate cut, with general vagueness about the future. The rationale was also as expected—interest rates are following inflation lower. Applying the ECB’s logic to the likely path of the economy, another couple of rate cuts seem likely this year, but Lagarde was not prepared to signal that strongly at yesterday’s press conference.

This week Shane reflects on the 80th anniversary of D-day, recap’s Dr. Anthony Fauci’s Congressional testimony, updates on the latest executive action directed at the US Southern border, along with developments surrounding the Israel-Hamas War. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

In the wake of Mexico’s election outcome earlier this week, Gaby outlines the results, weighs in on the market response, and shares the investment implications to be mindful of. Featured is Gaby Soni, Head of Investment Strategy Mexico, UBS Chief Investment Office. Host: Daniel Cassidy

There is a strong consensus about today’s ECB policy rate decision. A total of 53 out of 55 surveyed economists expect a 0.25% rate cut, and ECB Chief Economist Lane has practically promised an easing (chief economists are, of course, never wrong). The idea this year has been that most major central banks would follow inflation lower. Eurozone inflation is lower. Rate cuts are not stimulatory, but stabilizing (keeping the real interest rate steady).

On this week’s episode of Viewpoints, Burkhard explains the underestimated importance of the upcoming European elections, football championships, and the Olympics, along with what investors can learn from professional athletes, coaches, and teams.

Japan published some labor market data, with April cash earnings. On a like-for-like comparison, these were somewhat weaker than expected (and they remain negative in real terms). There are two points worth bearing in mind. An increasing share of Japanese consumers do not depend on earnings to finance consumption, because of population aging. And more of the Japanese economy has been supported by foreign consumers as tourists.

Paula joins Jason in-studio for a discussion around the US macroeconomic environment, including an outlook for growth, inflation and Fed rate cuts. We also spend time outlining portfolio positioning preferences. Featured is Paula Campbell Roberts, Chief Investment Strategist for Global Wealth, KKR, and Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The US provides the main data releases. JOLTS data on job vacancies is expected to continue to decline. The initial surge in vacancies in 2021 was strongly influenced by labor market churn. As that subsided, vacancy rates fell. Nominal wage growth continues to slow, which argues against a tight labor market.