Inflation has peaked, according to renowned Montreal investor and portfolio manager Nadim Rizk, founder and chief investment officer of PineStone Asset Management.
For inflation to run rampant again, he believes it will take another shock to the system like another war, China invading Taiwan for example.
This financial entrepreneur responsible for 60 billion in assets under management spoke Thursday at the Evening of forecasts, a very popular annual event in the financial sector, and overseen by the organization CFA Montreal.
Nadim Rizk was one of two distinguished guests at this dinner held at the Palais des Congrès in Montreal, which attracted more than 800 people, mostly investment professionals.
“Companies in which we are shareholders overwhelmingly tell us that raising prices this year is much more difficult than in 2022. There is much more resistance and companies are not feeling the same inflationary pressure,” Nadim Rizk said. to the representative of La Presse on the sidelines of the event, in which he participated.
“That’s not to say companies won’t raise prices a bit this year, but a lot less than in 2022,” he adds.
According to him, it takes a long time to clean the system. “Rates may go up a bit more and stay high for a while. We may never see 0% floor rates again as we have seen,” he said.
Nadim Rizk points out that central banks will wait to observe a downward trend in the statistics before cutting rates. “It makes a lot of sense because a central bank should focus much more on inflation than on the economy. A recession is not a good thing, but what is even worse is runaway inflation. It is very difficult to control, because it becomes very psychological as well. It causes an economic and social crisis, which is extremely dangerous for a society. »
This master investor who forged his reputation as a “stock picker” for more than 20 years – most recently at Fiera Capital, before launching his own asset management firm two years ago – continues to be fully invested in the stock market .
While he admits that the next few months are likely to be difficult for the US economy, he is very fond of the longer-term outlook. “The American economy is the most dynamic, flexible and innovative in the world. »
Also invited to participate in the Evening of forecasts alongside Nadim Rizk, the chief investment officer in wealth management at Morgan Stanley, Lisa Shalett, for her part, was rather pessimistic.
The stock market is essentially, she says, “on a roller coaster that will get you nowhere.”
“A year from now, the S-index
In particular, she believes that the outperformance of a handful of stocks in the same sector gives a false impression of health in the stock market.
A bull market, she adds, is propelled by positive surprises. Lisa Shalett wonders where these surprises might come from as possible rate cuts, a soft landing for the U.S. economy, inflation approaching the Federal Reserve’s 2% target, and expansion valuation multiples granted to companies (multiples already too high by 15% according to her) are all elements already discounted.
She also says she is far from convinced that corporate profits can surprise positively in the context where a recession remains a strong possibility.
“The current environment is one of the toughest I’ve experienced in my 30-year career so far,” she said.
Nadim Rizk is CEO, Chief Investment Officer and Senior Portfolio Manager at PineStone Asset Management, a Montreal-based global equity firm he founded two years ago.
PineSone’s assets under management total $60 billion for a primarily institutional clientele.
A native of Beirut, Lebanon, he notably studied at McGill University. He has worked in financial services for 26 years and was a portfolio manager at Fiera Capital until 2021.
