NEWSLETTER of March 10, 2023

The following content has been added at finexpert:

MFS
THE BIG MAC ON FIXED INCOME OPPORTUNITIES: WHAT'S ON THE MENU?
The case for fixed income has become much stronger. In our view, now is the time to get back into it. This is because the global macro environment is turning much more supportive, fixed income is now much better positioned in a multi-asset context and valuations have improved considerably. The next big question then becomes: Where in fixed income do I want to be positioned? The answer mainly depends on the investor’s specific risk appetite, duration target and return objectives. But the good news is that there is something for everyone in global fixed income. >more

EY
FINANZKOMPASS DEUTSCHLAND
Germans have little confidence in the financial sector: just 25 percent of Germans consider the banking and insurance industry to be rather or very trustworthy. Women are particularly aloof in this regard: Only 23 percent of female respondents and 26 percent of men have a high level of trust in the industry. Thirty-one percent of both men and women say the banking and insurance sector is not at all or not at all trustworthy. >more

Credit Suisse
GLOBAL INVESTMENT RETURNS YEARBOOK 2023 SUMMARY EDITION
The Credit Suisse Global Investment Returns Yearbook is the reference work for historical long-term returns. It is published by the Credit Suisse Research Institute in collaboration with the London Business School and covers all major asset classes in 35 countries. For most of these markets as well as the world index, data is available since 1900, i.e. for the past 123 years. >more

ValueTrust
EUROPEAN CAPITAL MARKET STUDY: DECEMBER 31, 2022
In this study, we analyse the relevant parameters used to calculate the cost of capital using the Capital Asset Pricing Model (risk-free rate, market risk premium and beta). Additionally, we determine both implied as well as historical market and sector returns. Moreover, this study includes capital structure-adjusted implied sector returns, which serve as an indicator for the unlevered cost of equity. The relevered cost of equity can be calculated by adapting the unlevered cost of equity to the company specific debt situation. This procedure serves as an alternative to the CAPM. >more

THE CLIMATE AND THE ECONOMY
Johannes Breckenfelder, Bartosz Maćkowiak, David Marques-Ibanez, Conny Olovsson, Alexander A. Popov, Davide Porcellacchia, and Glenn Schepens
2023
Climate change and the public policies to arrest it are and will continue reshaping the global economy. This Discussion Paper draws on economic research to identify some key medium- and long-run economic implications of these developments. It explores implications for growth, innovation, inflation, financial markets, fiscal policy, and several socio-economic outcomes. The main message that emerges is that climate change will cause income divergence across individuals, sectors, and regions, adjustment in energy markets, increased inflation variability, financial markets stress, intensified innovation, increased migration, and rising public debt. These challenges appear manageable for EU member states, especially under an early and orderly transition scenario. At the same time, the direction, scope, and speed of economic transformation is subject to large uncertainty due to two separate factors: the wide range of climate scenarios for a given trajectory of greenhouse gas emissions and the exact policy path governments choose, especially in the context of the ongoing Russian aggression in Ukraine. >more

ASSESSING THE IMPACT OF SUPPLY DISRUPTIONS ON THE GLOBAL PANDEMIC RECOVERY
Harri Kemp, Rafael Portillo, and Marika Santoro
2023
We estimate the role of (pre-Ukraine war) supply disruptions in constraining the Covid-19 pandemic recovery, for several advanced economies and emerging markets, and globally. We rely on two approaches. In the first approach, we use sign-restricted Vector Auto Regressions (SVAR) to identify supply and demand shocks in manufacturing, based on the co-movement of surveys on new orders and suppliers’ delivery times. The effects of these shocks on industrial production and GDP are recovered through a combination of local projection methods and the input-output framework in Acemoglu et al. (2016). In the second approach, we use the IMF’s G20 model to gauge the importance of supply shocks in jointly driving activity and inflation surprises. We find that supply disruptions subtracted between 0.5 and 1.2 percent from global value added during the global recovery in 2021, while also adding about 1 percent to global core inflation that same year. >more