Macroeconomics for Portfolio Managers

Course Overview

The recent sea-change in the global economy, brought about by, inter alia, the major shocks of COVID-19 and the Ukraine war, with a new regime characterised by higher inflation and interest rates as well as secular themes such as greater wealth polarisation and an increased focus on sustainability has highlighted the critically important – but also complex and challenging – role of macroeconomic analysis and forecasting in portfolio management.

Whilst portfolio managers have the benefit of more data than ever before, the task of distinguishing “signal” from “noise” in order to build a cohesive macroeconomic picture of the future and to determine implications for portfolio strategies has – if anything – become even more challenging and the judicious use of economic models such as IS-LM and Cobb-Douglas, which can vary significantly in their usefulness in different regimes, is key to effective forecasting.

This intensive programme focuses on the key macroeconomic variables impacting asset markets, their interactions and dynamics across business and other cycles. In addition, the course covers the key secular themes such as ESG and the evolving globalisation landscape which have a profound influence on long term socio-economic trends and asset valuation and income.

Learning Objectives

• Grasp the critical role and complexities of macroeconomic analysis and forecasting in portfolio management, especially in light of recent global economic shocks and changes, including the COVID-19 pandemic and the Ukraine war.
• Develop the ability to differentiate between essential data (“signal”) and irrelevant information (“noise”) to construct a comprehensive macroeconomic outlook that informs portfolio strategy decisions.
• Understand the application and limitations of economic models like IS-LM and Cobb-Douglas in forecasting, and learn how their effectiveness varies across different economic regimes.
• Analyse the key macroeconomic variables that influence asset markets, including how these variables interact and evolve through business cycles and other macroeconomic cycles.
• Explore the impact of key secular themes, such as environmental, social, and governance (ESG) criteria, wealth polarization, and changes in the globalisation landscape, on long-term socioeconomic trends, asset valuation, and income.
• Apply the insights gained from macroeconomic analysis and secular trends to make informed decisions on portfolio strategies, with a focus on navigating the challenges and opportunities presented by the current global economic environment.