Reflation and the Bull Market in Equities...The Future of ESG Finance...Beautycounter's Gregg Renfrew

[Goldman Sachs]( [BRIEFINGS] February 26, 2021 Reflation and the Bull Market in Equities The prospects of strong and synchronized growth, additional fiscal stimulus and low interest rates are raising questions about a return to a more inflationary environment—and what it might mean for global markets. The implications for risk assets are broadly positive, according to Goldman Sachs Research’s chief global equity strategist Peter Oppenheimer, who joined Jake Siewert for a recent episode of Exchanges at Goldman Sachs. Equities have seen record inflows in recent weeks, a trend he believes could go further as investors become more confident that deflationary pressures are receding and as inflation begins to rise. And if history is any guide, the current transition phase could be a high point for returns. “What we found from history over many decades is that, actually, the best returns of equities are when you're at a point where you have very low inflation and bond yields, but they start to increase. And that, again, is reflective of stronger growth expectations that we tend to get in recessions as investors start to price a recovery. But interest rates are still low enough to support risk assets,” Oppenheimer says. [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Is%20Inflation%20at%20an%20Inflection%20Point%3F&body=https%3A%2F%2Fyoutu.be%2FoGzXgFvsxIM) The Daily Check-In With Goldman Sachs Above: Carey Halio of Goldman Sachs As investors continue to seek out sustainable investment opportunities, they’re increasing their focus on the ‘how’—exactly how their capital will be used and how closely the investments align with their sustainability goals, says [Carey Halio]( deputy treasurer of Goldman Sachs, in a recent episode of The Daily Check-In. That consideration was central to the creation of Goldman Sachs’ recently issued $800 million sustainability bond, which is geared toward new investments related to climate transition and inclusive growth. “We wanted to respond to investors’ concerns around [these values] and make sure that we had a very robust process” for ensuring the bond meaningfully advances its sustainability goals, Halio says. Advancing sustainable economic growth and financial opportunity “have never been more important, given the environment we’re operating in today,” she notes. In other episodes of The Daily Check-In, [Neil Kearns]( of the Global Markets Division describes the surge in stock buyback activity as a number of companies—buoyed by strong earnings growth and high cash balances—return cash to shareholders, while [William Wolcott]( also of the Global Markets Division, describes the role that credit ETFs are playing in the “equitization” of the credit markets. For more Daily Check-In videos, [subscribe to our channel]( on YouTube. [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.youtube.com%2Fplaylist%3Flist%3DPLIyiGQywEp65ogt2Bi3vTK7ngXDTM6wT9) Talks at GS With Beautycounter’s Gregg Renfrew Above (L to R): Kathy Elsesser of Goldman Sachs and Gregg Renfrew of Beautycounter Gregg Renfrew founded cosmetics brand Beautycounter with the aim of disrupting the personal care industry by selling clean skin care and beauty products directly to consumers. “For me it was a mission,” Renfrew says in a recent Talks at GS episode. “I wanted to make the world safer and healthier…[and] to transform an antiquated industry.” Renfrew’s mission includes advocating for new regulations on the kinds of ingredients allowed in beauty products. “We've really been focusing on both the state and federal level on cosmetic reform because we believe that having access to safe products should be your right,” she says. [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20With%20Beautycounter%E2%80%99s%20Gregg%20Renfrew&body=https%3A%2F%2Fyoutu.be%2FXZYwI96PNd0) Briefly...on the Safe Haven Capital of the World In times of uncertainty, Switzerland, long known as a safe haven for financial assets, has benefited from strong investor inflows. We sat down with Dominique Wohnlich, head of Goldman Sachs’ Private Wealth Management business in Switzerland, to discuss the impact of the pandemic on the business and what clients there are focused on. Dominique, can you give us a sense of the concerns that are top of mind for your clients right now? Dominique Wohnlich: Clients are clearly still concerned about COVID-19, as countries across Europe struggle with the distribution of the vaccine. In Switzerland, there have been about 500,000 infections in a population of about 8.5 million, although we expect a large proportion of the country’s population to be vaccinated by the end of the second quarter. And given expectations of stronger global growth in an environment of relatively low interest rates, clients are looking to increase their allocation to risk assets, specifically to public equities and private markets. Did the pandemic have any impact on clients’ investment strategies? Dominique Wohnlich: Since many of our clients were unsettled by the market upheaval and concerned about their families’ health and safety, our conversations with them increased sharply. The majority of our clients initially focused on creating more short-term liquidity, although many remained actively invested in the markets. Still, the crisis affected our clients in different ways. Many businesses had to re-evaluate their financing structure to diversify and improve flexibility, while others with tech-focused operations benefited from the digital acceleration across industries. And some clients with exposure to the European hospitality or tourism sectors faced some difficulties. Throughout those conversations, we emphasized the importance of staying invested. Tell us more about the investment landscape in Switzerland. Why is it considered an important financial hub? Dominique Wohnlich: There are really two primary reasons: the country’s banking system and Switzerland itself. Switzerland’s banking system holds about $4 trillion in private assets, of which about two-thirds are from investors and families domiciled outside of the country. Overall debt levels are relatively healthy with the country’s national debt amounting to about 41% of gross domestic product in 2019—a figure that is estimated to remain below 50% in the coming years. In addition, the country’s strong data protection framework is becoming increasingly important to wealthy clients looking to protect their families’ privacy. And aside from being one of the wealthiest countries in the world, the Swiss franc is considered a safe-haven currency. In fact, any time there is a global crisis, the country sees significant asset inflows. Looking ahead in 2021, what are some of your priorities and opportunities you see in the region? Dominique Wohnlich: One of our priorities is to build on our commitment to the region and long experience in managing money for international families. The population is expanding and with it, the country’s aggregate wealth, which makes it an exciting time to be in the market. Along those lines, we have a presence in Zurich, recently re-activated our office in Geneva and have been hiring top talent to expand our business here. As far as investment themes, sustainable finance is a key focus for our clients in the region, especially now that Europe has embarked on the path to become the world’s first climate-neutral continent by 2050 and has announced a new Green Deal that will drive economic recovery. In fact, our largest clients are committing substantial capital to ESG and impact strategies. Beyond that, since COVID-19 has created a situation where the return outlook for high-quality fixed income is challenging in most European countries in the near future, our clients are looking to generate returns through growth sectors, such as technology, or by looking to invest in higher-growth jurisdictions as well as in alternative asset classes, such as private equity. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly...on%20the%20Safe%20Haven%20Capital%20of%20the%20World&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Bloomberg - February 23 [Goldman's Currie Sees $16 Trillion Green Capex Driving Commodities Demand]( (7:35) Tearsheet - February 22 [“You Want the Right People to Come In and Say, ‘I Think I Can Do This Job’”: What Banks Are Doing to Hire More Neurodiverse Employees]( CNBC - February 19 [Goldman Sachs’ Jonny Fine Says Stimulus Package Is a Small Price to Pay]( (2:44) CNBC - February 19 [Here’s How Goldman Sachs Is Supporting Diversity In Small Business]( (3:46) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. Goldman Sachs has no obligation to provide any updates or changes to the data. No investment decisions should be made using this data. To the extent this newsletter includes material from the Goldman Sachs Securities Division, please click [here]( for information relating to Securities Division material and your reliance on it. © 2020 Goldman Sachs, All rights reserved. 200 West Street, New York, NY 10282, USA [GS.com]( | [Careers Blog]( | [Privacy and Security]( | [Terms of Use]( [Facebook]( [Twitter]( [LinkedIn]( [YouTube]( [Instagram](