Episode summary
Inflation and Geopolitics Impact Markets | Bloomberg Surveillance
Bloomberg Surveillance
· · 29 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Seema Shah, Paul Quinsee, Elizabeth Economy, Mark Howard
Summary
The discussion centered on how hotter inflation prints, geopolitical conflict and a shifting Federal Reserve backdrop are reshaping investor decisions. The host and Seema Shah argued that central banks have become highly reactive to data, which raises the risk of policy errors, but she said a new Fed chair would likely have only a minimal near-term policy impact because the economy remains strong and inflation is still running hot.
Shah said global diversification remains essential because the US is surprising to the upside while Europe and Asia are more exposed to geopolitical shocks, even as AI creates a powerful secular tailwind. Paul Quinsee made the case for emerging markets, saying earnings growth is strong and valuations remain attractive, with Taiwan now larger than China in the MSCI emerging-market index. He also said a flat or weaker dollar is important for the asset class.
Elizabeth Economy said Xi Jinping has consolidated power and is pursuing Chinese ambitions globally, while the US-China relationship remains one of managed strategic competition. Mark Howard said risk appetite is being driven by enthusiasm for AI rather than by concerns about the Middle East, Taiwan or private credit, and he warned that higher yields and higher inflation are pressuring real incomes and pushing more issuance into the market.
Key takeaways
- Shah said the Fed is likely to stay on hold in the near term because the economy is strong and inflation is still surprising to the upside.
- Shah argued that global diversification matters more now because Europe and Asia face more geopolitical risk than the US.
- Quinsee said emerging-market earnings are up north of 40% this year, making the asset class attractive despite a strong US market.
- Quinsee said a flat or weaker dollar is crucial because a strong dollar “just sucks the life out of the emerging markets.”
- Economy said Xi Jinping has consolidated power and that US-China relations are best understood as managed strategic competition.
- Howard said AI optimism is dominating markets even as higher inflation and yields weigh on real incomes and business conditions.
Notable quotes
“I think it's a really difficult environment for a central bank to be cutting interest rates”
“global diversification is still key though. uh there's going to be companies in Europe and in Asia who are going to be well positioned”
“earnings up for north of 40% for the emerging markets”
“A really strong dollar just sucks the life out of the emerging markets”
“the goal here is largely the same as it's been you know for two decades or more which is sort of a managed competition managed strategic competition”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m.
Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. We have great analysis now, particularly picking up the pieces of a Federal Reserve present and a Federal Reserve future.
Uh joining us, Sema Shaw, she's chief global strategist, principal asset management. To me, Sema, the heart of the debate, whatever anyone thinks, is a humility on the part of a central bank, including the Bank of England, of getting out front of the debate or waiting to see what the data hands you. That's called Expost.
How expost are central banks right now?
Hi Tom. Yeah, look it was an interesting interview and I think that you know as you said what we've seen from central banks everywhere is that they become very very responsive to the data which when you're confronting shocks like we've had in the last 5 to 6 years um it does make their job really difficult and it creates the risk the higher risk of policy errors. Um I think what what John was saying at the end of the interview there about the importance of creating discussion is absolutely right.
I mean in every single company uh from an investor standpoint we try and res revisit the framework um that we've created for our portfolio decisions that's normal particularly in a time where the circumstances when the backdrop of the economy of the market is shifting and I think for the last five six years that is exactly what we're seeing the the kind of the the increase in geopolitical risks the focus on supply chains uh things are shifting really really rapidly and so we do need to revisit the framework even if it's just a decide stick with the same thing
And you are wonderfully qualified for this question.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- inflation
- geopolitics
- fed policy
- credit markets
- equity diversification
Companies and tickers mentioned
- PFG
- JPM
- Principal Asset Management
- JPMorgan Asset Management
- BNP Paribas
Watch the episode
Watch “Inflation and Geopolitics Impact Markets | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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