{{r.fundCode}} {{r.fundName}} {{r.series}} {{r.assetClass}}

Welcome to the new RBC iShares digital experience.

Find all things ETFs here: investment strategies, products, insights and more.

About this podcast

David Riley, Chief Investment Strategist, BlueBay Asset Management, shares his thoughts on the U.S. presidential election results from a European perspective. David also discusses how international markets may respond to a Biden win, as well as the outlook on the U.S economic recovery should lockdown restrictions stiffen. [6 minutes, 23 seconds] (Recorded November 6, 2020)

Transcript

Hello and welcome to The Download. I’m your host, Dave Richardson. I am joined today by another David with much more interesting things to say than I ever do, David Riley, the Chief Investment Strategist at BlueBay Asset Management in London, England. David, welcome back to the podcast.

Thank you, David. It’s a pleasure. And I’m happy that you built me up so well.

Well, that’s because you always deliver and you always have an interesting perspective, and I think it’s always interesting for Canadians to hear the perspective from someone across the pond, so to speak. And you, I’m sure, as we’re watching here in Canada, you’re watching the U.S. election results. We’re taping this podcast, just to be clear, on the morning of Friday, November 6th. So at this point, things are quite clearly pointing towards a new presidency, a Biden administration, although there’s still plenty of counting and legal wrangling still going on. But, David, let’s just make the assumption that we have a Biden presidency. From your perspective in the UK and really with a mandate to look at the global economy, how do you think this affects the global economy and global markets?

Yes, it’s clearly important. I do think that a Biden presidency is going to be met with a sigh of relief, to be frank, across a lot of European capitals. It reduces the prospect of a worsening in political and trade relations between the EU and the US. Of course, the US is the largest trade partner. Biden will likely take the US back into the Paris climate accord as well. And I think it just reduces the trade risk, geopolitical risk and the volatility or unpredictability risk somewhat associated with the Trump administration. In that context, I also think it makes sense for there to be a weaker dollar. So against that backdrop, I think it’s going to have positive implications for relations between the US and Europe. But I also think it’s going to be quite positive actually for emerging market assets. I think it does imply a somewhat weaker dollar as well. So I think international markets are going to take it quite well.

Yes, and I know you’re experiencing now a fairly serious second wave of Covid-19 in the UK itself. You’re experiencing a lockdown, not exactly like the ones in the spring, but similar. Mr. Biden has talked a lot through his campaign about being much more aggressive in tackling the virus in the United States. Do you see that as increasing the potential for lockdown in the United States? Then what would be the spillover effect to the global economy from your perspective?

Yes, I think that the lesson has been learned; a shocking second wave across Europe, just how quickly the virus has spread and how quickly that has also led to an increase in hospitalizations, which has basically forced very reluctant governments, including the UK government, to, as you say Dave, reimpose national lockdown. Pretty severe, not quite as severe as in in the spring, but nonetheless one that is going to have a meaningful negative impact on growth in the fourth quarter. In fact, we will probably get negative or a contraction across a number of European economies, including the UK. I think the lesson from there, though, as well for the US, is almost a policy choice by governments. If we see the US and North America follow the same trend as severely as we’ve seen in Europe, then hospital capacity will come under pressure. And irrespective of who is in the White House, individual states and localities will have little choice but to start imposing some additional restrictions. Of course, we as individuals, as consumers, as citizens are going to alter our behavior as well. Some sort of voluntary social distancing. So I’m less concerned about a Biden win which implies that the US is going to choose to go down a lockdown path. I’m more concerned if the virus does continue to spread and accelerate across North America, then governments will certainly, at the local level, be forced to take some action. Right now, the US recovery is actually looking pretty strong. That’s something important for the global economy and global recovery more generally.

Yes, terrific jobs numbers in the U.S. that were reported this morning. So, yes, clearly on a path to recovery, but many challenges ahead. And once again, David, you’ve helped put that in perspective from the European point of view, obviously from a global sense as well. Always insightful and always great to have you with us, David. Thanks for your time.

Yes. Always a pleasure. Thanks Dave.

Disclosure

Recorded November 6, 2020

RBC Global Asset Management is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc., RBC Global Asset Management (U.S.) Inc., RBC Global Asset Management (UK) Limited, RBC Global Asset Management (Asia) Limited, and BlueBay Asset Management LLP, which are separate, but affiliated subsidiaries of RBC.

This report has been provided by RBC Global Asset Management Inc. (RBC GAM Inc.) for informational purposes as of the date noted only and may not be reproduced, distributed or published without the written consent of RBC GAM Inc. Additional information about RBC GAM Inc. may be found at www.rbcgam.com. This report is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon for providing such advice. RBC GAM Inc. takes reasonable steps to provide up-to-date, accurate and reliable information, and believes the information to be so when provided. Past performance is no guarantee of future results. Interest rates, market conditions, tax rulings and other investment factors are subject to rapid change which may materially impact analysis that is included in this document. You should consult with your advisor before taking any action based upon the information contained in this document.

Any investment and economic outlook information contained in this report has been compiled by RBC GAM Inc. from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM Inc., its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM Inc. and its affiliates assume no responsibility for any errors or omissions.

All opinions and estimates contained in this report constitute RBC GAM Inc.'s judgment as of the indicated date of the information, are subject to change without notice and are provided in good faith but without legal responsibility. Interest rates and market conditions are subject to change. Return estimates are for illustrative purposes only and are not a prediction of returns. Actual returns may be higher or lower than those shown and may vary substantially over shorter time periods. It is not possible to invest directly in an unmanaged index.

A note on forward-looking statements:

This report may contain forward-looking statements about future performance, strategies or prospects, and possible future action. The words "may," "could," "should," "would," "suspect," "outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," "forecast," "objective" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance. Forward-looking statements involve inherent risks and uncertainties about general economic factors, so it is possible that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement. These factors include, but are not limited to, general economic, political and market factors in Canada, the United States and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological changes, changes in laws and regulations, judicial or regulatory judgments, legal proceedings and catastrophic events. The above list of important factors that may affect future results is not exhaustive. Before making any investment decisions, we encourage you to consider these and other factors carefully. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith but without legal responsibility.

® / TM Trademark(s) of Royal Bank of Canada. Used under licence.

© RBC Global Asset Management Inc., 2020