During this interview with Bloomberg, Howard Marks highlights the U.S economy’s swift recovery in the third quarter of 2020 despite stable interest rates and the absence of additional stimulus.
He notes the robust performance of the labor market and investor confidence in the U.S, driven by its legal and economic systems. However, he points out that U.S assets are highly priced, suggesting that better investment bargains may lie outside the U.S, particularly in less popular markets like China.
Marks emphasizes his firm’s approach of seeking undervalued opportunities globally, rather than adhering to a specific geographic diversification strategy.
Here’s an excerpt from the interview:
You know, the US had a brief period of difficulty in the second quarter of 2020. The economy rebounded very nicely in the third quarter and has been doing very well since then.
Despite the fact that interest rates have not been cut, there are people arguing for stimulus, but so far they haven’t gotten it. It doesn’t seem there’s a need to stimulate it, given how well the economy is doing and how labor is doing.
But, you know, obviously, as you say, other countries are not quite doing quite as well. There seems to be some asynchronous elements in the global monetary picture. But, you know, I think that most things are going in the right direction. People are very happy investing in the United States.
They like our legal system, economic system, the corporate sector. And, you know, the only thing that’s challenging about the U.S. is that a lot of those merits are priced in.
Given that the U.S. has priced highly, a lot of the opportunities for bargains are outside the U.S.
Obviously, China is on a lot of people’s uninvestable list that tends to depress its value. And we like to look at things that other people aren’t interested in. So China is one good example.
But, you know, we are not macro investors. We’re not top down. We don’t affect a geographic diversification for its own sake. We go where the bargains are and we’re finding lots of bargains in many places.
You can watch the entire interview here:
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