Before launching her London-based asset management firm, Dr Philippa Malmgren was Deputy Head of Global Strategy at UBS. Her chief role is to help fund managers better understand how politics, policy and geopolitics will impact on the financial markets.
Pippa is the founder of the Canonbury Symposia, which brings together high-level experts on strategic security, defense, intelligence and finance. She also served as a market advisor in the White House and sat on George W Bush's National Economic Council - and before that taught at a Beijing university.
In presentations Pippa offers a global overview. Against prevailing opinion, she believes the BRIC economies are less interesting than the commodity-producing BRACSS: Brazil, Russia, Australia, Canada, South Africa and Saudi Arabia. She shows how commodity price rises spell inflation in emerging markets almost immediately, because half their income is spent on food and energy. (China is experiencing demands for 50% pay increases from unskilled workers.)
Pippa sees civil unrest generating further uncertainty, which in turn causes market volatility. On the other hand, she explains why 'soft' defaults within the Eurozone can pass with little turmoil. Meanwhile she shows how new gas finds in the States could have the capacity to create another 'Silicon Valley' type boom.
Pippa Malmgren has been hailed as a 'Global Leader for Tomorrow' by the World Economic Forum. She's a frequent guest on the Today programme and Newsnight, and regularly presents CNBC's Squawk Box. She also has a column in Investment Week and has written for both International Fund Investment and Institutional Investor magazines.
© Copyright JLA: All Rights Reserved
Where business meets geo-politics
£5K TO £10K
AFTER DINNER SPEAKERS
YOU MAY ALSO BE INTERESTED IN...
If you can't find who you're looking for ... click here
JLA: Will the BRICs continue to provide the engine for growth?
PM: More important than the BRICs are the commodity-producing BRACSS: Brazil, Russia, Australia, Canada, South Africa and Saudi Arabia. So long as banks hold back lending, marginal suppliers' capacity will diminish and the supply-side shock in assets extracted from the planet will persist. Money is pouring into speculative trading in foodstuffs, raw materials and oil - rather than production.
JLA: And this will feed inflation?
PM: Commodity price rises spell inflation in Emerging Markets almost immediately, because half their income is spent on food and energy. It devastates the poor and low income workers, which is why protests, riots and coups begin. When the price of an onion goes up 100% in India, it's not surprising to see wage demands jump. In China inflation is leading to demands for 50% increases from unskilled workers (according to real businesses, not government numbers).
JLA: So we should be wary of investing in emerging markets?
PM: It's ironic that Western investors have most of their portfolio allocated to emerging markets. Top line growth might look attractive, but costs are pushing inflation up which means higher interest rates. Meanwhile higher costs squeeze productivity leading to lower returns, and civil unrest generates uncertainty that is bound to cause market volatility.
JLA: So where are the investment opportunities?
PM: There will be innovations in the delivery of medical services in the emerging markets. Defence is also interesting; budget cuts will bite into traditional capital-intensive equipment, but governments will spend on satellites and cyberspace. Meanwhile new gas finds in the US have the capacity both to reduce America's dependency on imported oil, and create the next 'Silicon Valley' type boom. The site of the largest gas field might make Pennsylvania the next big thing.
JLA: How do you see the Eurozone faring in 2011?
PM: There will be 'soft' defaults within the Eurozone, which will pass with little market turmoil. It is also quite possible that countries will temporarily 'check out' so they can devalue and get their economies growing again - committing to return at a better exchange rate and a more compliant debt to GDP ratio. While this series of events would be traumatic, it is survivable.