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Coronavirus could be a ‘major turning point’ for sustainable investing, says JPMorgan

It may be the first time that the public does the shopping — by choosing portfolios, rather than relying on everyone else’s judgment.

In a hotly contested panel discussion, Michael Ivins, Global Head of Sustainable Investment Strategy at JPMorgan Asset Management, hinted at why he and fellow panelists, including David L. Sobel, a British entrepreneur, were so worried about what happened in London. He noted that the former commodity-trading hub suddenly looks a lot like Germany when, a decade ago, it was still well-known as the source of the world’s dangerous medicines.

Imagine what a setback this would be if it carries over into the world of investing. The sentiment was captured by Ted Benitez, of Chicago-based Hefty Wealth Partners: “It really could be the worst investment disaster in the history of our industry.”

It’s something of a head-scratcher. Sure, almost all investment managers in a global industry would be tempted to short the stock market when it’s slumping. But the overwhelming majority of investors are expected to stay the course, and most stock-market participants have been putting money into the S&P 500 on a daily basis.

If things don’t improve, and short-sellers pour in and drive the market to the lower end of its normal range, they can only sell stocks into a more expensive market. Short-sellers aren’t expected to buy stocks. They’re expected to be in such short supply that prices temporarily jump and then decline, although this often happens with different situations, like the frequent swoons caused by unexpected terrorist attacks.

The Cleveland Clinic is now owning a percentage of some or all of our companies.

Ivins’ question is whether something tells investors the market can only go so far without hurting them. After all, the fundamentals haven’t changed much. Lower growth means slower earnings growth. Fewer mergers and acquisitions doesn’t mean growth is lower, because corporate financial performance depends heavily on earnings growth. And debt continues to pile up.

But debt, as economist Gary Shilling, who was also at the conference, explained, is a “sign of uncertainty.” When it’s too high and becomes expensive to roll over or reduce, it disrupts corporate operations and investment. And then it can affect tax collections, or threaten to topple countries.

All of which would explain why the UK market looked so rough on Tuesday. Prime Minister Theresa May’s government has collapsed, and in the circumstances it’s hard to imagine how this market will do well. The European Union is working on forming a new government, and the European Central Bank holds interest rates low until the end of the year. But no one quite knows what kind of government the British will get, nor can anyone tell when the uncertainty will resolve itself. So stocks can move in either direction almost in lockstep.

“It reminds me of my old research on trying to figure out why big families had more children,” said Shilling.

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