CONTRIBUTORS
Francis A. Scotland
Director of Global Macro Research,
Brandywine Global
Preview
Waiting for the next shock?
The world is flooded with confusion and change. The S&P 500 Index and the U.S. economy have defied consensus pessimism this year. Investment hype surrounding artificial intelligence (AI) has gone manic. Europe’s war keeps escalating. The Wagner Group’s revolt could be a sign of even more instability. Climate change anxiety has been ramped up by the Canadian forest fires. The Organization of the Petroleum Exporting Countries (OPEC) has tried twice this year to support oil prices and failed. China’s reopening has been underwhelming. The U.S. is facing massive budget deficits as far as the eye can see and a contentious presidential election race. The free market era of Thatcher/Reagan-ism has given way to populist political tribalism, big government, and industrial policies. No wonder the multi-polar world is edging out the status quo and trying to dump the U.S. dollar.
Definitions
The Organization of the Petroleum Exporting Countries Plus (OPEC+) is a loosely affiliated entity consisting of the 13 OPEC members and 10 of the world’s major non-OPEC oil-exporting nations. OPEC+ aims to regulate the supply of oil in order to set the price on the world market.
The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S.
WHAT ARE THE RISKS?
Past performance is no guarantee of future results. Please note that an investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors.
U.S. Treasuries are direct debt obligations issued and backed by the “full faith and credit” of the U.S. government. The U.S. government guarantees the principal and interest payments on U.S. Treasuries when the securities are held to maturity. Unlike U.S. Treasuries, debt securities issued by the federal agencies and instrumentalities and related investments may or may not be backed by the full faith and credit of the U.S. government. Even when the U.S. government guarantees principal and interest payments on securities, this guarantee does not apply to losses resulting from declines in the market value of these securities.
China may be subject to considerable degrees of economic, political and social instability. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks.