D-cipher video series: Introduction to the 3D reset and regime shift
Welcome to D-cipher, the new video series to help you understand the 3D reset. Here we aim to provide investors with a deeper understanding of the 3D reset, and the implications of this regime shift.
Follow us as we explore the complexities of demographics, deglobalization, and decarbonization, and decipher the resulting investment challenges and opportunities.
By demographics, we mean changing dynamics in the global labor force. Population growth has slowed and even reversed in many countries. Additionally, the shock of the global pandemic has changed people's attitudes towards work and their ability to work. These factors have made it harder for companies to find sufficient workers, contributing to wage growth and shortages.
Deglobalization represents a disruption to the era of globalization that persisted for 30 years. While companies will continue to seek cost savings, there's an increased emphasis on resilience, reliability, and control, and a willingness to pay more for it.
Decarbonization recognizes that governments around the world are more aggressively working to rebuild their energy infrastructure, because of both environmental and national security concerns. These long-term forces drive immediate implications for the global economy.
A key conclusion, is that the trade-off between growth and inflation for the economy has worsened. Compared to the last quarter century when inflation and growth had a weak relationship, we're returning to a pattern where higher levels of growth lead to greater inflation pressures.
As a result, we believe central bank policy will continue to emphasize inflation, and we should expect higher levels of interest rates than in past decades.
In coming videos, we'll dig deeper into these themes and their investment implications.