Nevertheless, the US economy remains on relatively firm ground, thanks to the massive fiscal and monetary support during the pandemic. US household debt-toGDP has been declining steadily, from the pre-global financial crisis high of about 100%, to about 77% currently. This is, in fact, lower than that for Malaysian households (89%). The headline data suggests that US consumers have the capacity to spend and drive growth going forward. We will explore whether this is the indeed the case in the near future.
The Global Portfolio executed a major strategic shift in early April. We have articulated our rationale behind the move, which was primarily predicated on expectations of a world moving increasingly out of sync — as a result of diverging Covid-19 and reopening strategies, economic growth as well as fiscal and monetary policies.
The portfolio is still biased towards US stocks, which we think will continue to outperform in the short to medium term, despite current volatility. Stocks are being buffeted by growing worries that the Federal Reserve will be forced to tighten more aggressively, thereby risking recession, as inflation runs hot.
