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Carsten Roemheld speaks to Fidelity International's Chief Investment Officer Andrew McCaffery about the widening economic repercussions of the war in Ukraine.

Ways to listen


On supply chains

“This is not just about energy, though. As we’ve seen that process of taking oil prices and gas prices higher, we’re also seeing other areas being cut off […] I think we have to think about how that will impact into economies and supply chains and then the way that will play through into how policy makers across the world do and don’t need to respond.”

On stagflation/recession

“If we look to Europe, then very rapidly there is increased concern that this moves from not just a stagflation environment, but actually tips towards a recessionary position. If we look to the US today, it’s much more in that stagflation environment still.”

On asset allocation

“We’re seeing both bonds and equities are down […] I think that shows what the challenges are when you try to navigate this from a market and asset allocation perspective, as well as trying to think about those economic environments.”

On the ECB 

“As we see prices being maintained, as the cost-of-living impact flows through, as income becomes severely impacted, the [European Central Bank’s] ability to follow through on this relative hawkishness is going to be challenged. And it may be that it takes a little bit of time for them to reposition. But I do think it's highly unlikely that we're going to see an aggressive profile and any interest rate moves following through during the course of this year.”

On central banks

“The markets are trying to navigate a difficult profile of conflicting positions between what central banks actually do versus what they say. The markets are also thinking about how much they want to discount the stagflationary pressures, the recessionary pressures or the very strong inflationary pressures that are playing out for some countries where we haven't seen the level of growth impact come through yet.”

On equities

“When looking to the equity market, I tend to be in the camp that's looking for that strength of cash flow and balance sheet, but also for some of the markets that don't have some of the larger impacts. And that means we continue to look to China, to Asia, to Japan for opportunities to increase weightings relative to the US and, to a degree, relative to Europe, because we cannot ignore the recessionary risks that are building at the moment.”

On credit

“We maintain our relative underweight in credit but have added back a little bit of duration. We see that continuing for now, and especially if we see that pendulum swinging towards recessionary concerns, pricing could become a bit more difficult as default rate expectations stay robust, or even increase a bit further.”

Andrew McCaffery

Andrew McCaffery

Global CIO, Asset Management

Carsten Roemheld

Carsten Roemheld

Capital Markets Strategist

Sebastian Morton-Clark

Sebastian Morton-Clark

Content Director