The Wellington Blog — A diverse marketplace of ideas, where our investment professionals share and challenge each other’s views. They decide independently how to draw on those ideas to sharpen their investment decisions, unconstrained by any single “house view.”
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Every quarter, the Wisdom of Wellington team surveys around 100 of our Wellington colleagues across different investment disciplines and locations to get their views on what we see as the key macro questions of the day. The results can pinpoint where the firm’s views differ from the consensus and can also reveal important shifts in our collective thinking.
In January’s survey, we asked which risks the market was most complacent about. This quarter, we followed up by asking respondents to rank which upside risks the market should be focusing on (Figure 1). The number two upside risk was the potential release of pent-up savings amassed during the pandemic, which has already been the subject of widespread comment. But the top-ranked upside risk — of a structural boom in capital expenditure (capex) — has attracted far less comment. Many of our macro thinkers believe that the market is underestimating the potential for a lasting increase in capex fueled by investment in green initiatives and infrastructure…
The US military defines a “complex catastrophe” as a “natural or man-made incident […] which results in cascading failures of multiple, interdependent, critical, life-sustaining infrastructure sectors and causes extraordinary levels of mass casualties, damage, or disruption severely affecting the population, environment, economy, public health, national morale, response efforts, and/or government functions.”1
Working with Wellington’s Climate Research Team, our Global Macro Team is studying the macro, market, and geopolitical implications of climate change. We see climate change as a complex catastrophe in the making, with the potential to exacerbate geopolitical instability and multiply threats to economic and national security. Governments, including the US, China, and European Union, are beginning to treat climate change as a structural peril. Under the Biden administration, climate change has…