Luke Barrs, global head of client portfolio management at Goldman Sachs Asset Management, joins ‘Closing Bell’ to discuss long …
source Goldman Sachs’ Luke Barrs has outlined his reasons for believing that, despite the many worrying economic signals of late, a soft landing is more likely than not.
Barrs cautioned that although it is difficult to predict the economic outlook in the short term, the responsibility of a responsible investor is to “reduce kneejerk reactions, and instead to develop an understanding of the environment and make informed judgements.”
It is this approach that has informed Barrs’ reasoning as to why a soft landing is most likely. Despite downward revisions in global growth predictions and the continued uncertainty over how long the US-China trade war will drag on, Barrs has identified three key tailwinds that he believes provide reason for optimism.
The first of those tailwinds is the US Federal Reserve’s continued low interest rates and the suggestion that the FOMC is unlikely to raise rates this year. Barrs also believes that, in spite of recent bouts of volatility and the depressed nature of some equity markets, the underlying fundamentals remain relatively sound in the US and other developed markets.
Finally, Barrs pointed out that investors have so far been rewarded for taking news of weaker economic data in their stride, with equity markets having enjoyed a strong bounce in the past week.
Things could, of course, still take a turn for the worse. However, Barrs believes that the situation warrant close monitoring rather than panic, and that taking advantage of opportunities as they arise is key – especially with the possibility of a soft landing on the horizon.
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