Economic and Market Commentary

Economic Disruptors and Swing Factors

The pandemic has amplified and accelerated four secular disruptors, and two key swing factors that could produce upside or downside surprises. We believe that being prepared is vital to investment success over the next three to five years.


More from this section

Read Transcript

Text on screen: PIMCO

Text on screen: PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized

Text on screen: Candice Stack, Head of Client Management, Americas

Candice Stack: We titled our actual Secular Outlook, Escalating Disruptions, the theme of disruptions being one that we've spoken about for several years now. So with that backdrop, can you just frame what is our actual macroeconomic outlook for the next 3 to 5 years? And I think importantly, what has changed in light of the pandemic versus what components might be actually consistent relative to last year's secular outlook forecast?

Text on screen: Joachim Fels, Global Economic Advisor

Joachim Fels: We continue to think that investment success will be defined by being prepared for disruptions as they arise and to use those opportunities when the volatility happens to exploit those opportunities. So that hasn't changed. What has changed is that we think the pandemic has amplified and accelerated several of these secular disruptors that we have been talking about for quite some time now.

Text on screen: Escalating Disruptions – Crisis amplifies secular disruptors: Secular Disruptors - China, Populism, Technology, Climate

First of all, China's rise as an economic superpower, that in a way has been accelerated by the pandemic because they have been dealing with the pandemic much more efficiently and the economy has rebounded much more sharply. What this means is that the U.S. will likely continue to push back because it feels challenged as the leading, the dominant superpower, and we think this will not change under any administration. So whether you get a Trump or a Biden administration, the pushback to China will continue to be strong.

Second disruptor, populism. Inequality has been a major driver behind the rise of populism, and we think the pandemic actually increases both income and wealth inequality. So you're likely to see more polarization in the political spectrum, across the political spectrum, and this raises the risk of more extreme policy outcomes in the future.

A third disruptor, technology. The pandemic has turbocharged digitalization and the move from physical to virtual. And so this creates a lot of winners, but also a lot of losers. It actually may create more losers because there may only be a few very large winners from this accelerated move to digitalization, the large technology companies.

And then fourth but not least climate-related risks have come very much into the spotlight this year with weather events all around the world, This creates physical risks both for human lives and capital and for economic growth. It also creates transition risks as companies and also investors respond to the move from brown to green.

So overall, we think financial markets can ignore risks as long as they like, but in the end, the disruptions happen. And we want to identify and be prepared for those disruptions well in advance.

There are two key swing factors that will determine the precise shape of that cyclical recovery.

Text on screen: Escalating Disruptions – Crisis amplifies secular disruptors: Swing Factors: Virus, Fiscal Policy

The first one is obviously the health situation. On the downside, we may get more second waves. We're seeing some of this in Europe at the moment. Also here in the U.S. in some regions. But there's an upside risk, which is that we get a vaccine maybe earlier than expected and that it turns out to be effective and available. And a vaccine can really serve as a stimulant also for the economy. And speaking of stimulants and stimulus, fiscal policy, that's the second key swing factor. Depending on how active fiscal policy will be over the next few years around the world, that will influence the shape of the recovery.

Text on screen: Key takeaways – We expect higher volatility, Fiscal policy will be an important driver, Active management will be key

First of all, we expect higher volatility due to these four disruptors and potentially lower returns from public liquid asset classes over the next 3 to 5 years. Second point, fiscal policy as discussed will be a key driver, but the jury is still out on which way it will go. And then thirdly, active management and rigorous credit selection will be key for investors. We'll have to navigate the winners and the losers from the various disruptions that we discussed. And we continue to think success will be defined to be prepared for market volatility and then to use and pursue the opportunities that arise when the volatility hits.

Text on screen: For more insights and information, visit

Text on screen: PIMCO


All investments contain risk and may lose value. Management risk is the risk that the investment techniques and risk analyses applied by an investment manager will not produce the desired results, and that certain policies or developments may affect the investment techniques available to the manager in connection with managing the strategy.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2021, PIMCO

Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626.


Filters: Reset All


Close Filters Dropdown
  • Tags


  • Category


    Bond by Bond
    Economic and Market Commentary
    Investment Strategies
    PIMCO Foundation
    PIMCO Education
    View from the Investment Committee
  • Order By


    Most Recent
() filters applied

Multimedia Finder

Filter By:
  • Bond by Bond
  • Careers
  • Economic and Market Commentary
  • Investment Strategies
  • PIMCO Education
  • View from the Investment Committee
  • Viewpoints
  • Understanding Investing
  • A
  • B
  • C
  • D
  • F
  • G
  • H
  • I
  • K
  • L
  • M
  • N
  • O
  • P
  • R
  • S
  • T
  • W
Tina Adatia
Fixed Income Strategist
Olivia A. Albrecht
Head of ESG Business Strategy
Joshua Anderson
Head of Global ABS Portfolio Management
Robert Arnott
Founder and Chairman, Research Affiliates
Andrew Balls
CIO Global Fixed Income
Rachel Betton
Portfolio Manager, Municipal Bonds
Justin Blesy
Asset Allocation Strategist
David L. Braun
Head of US Financial Institutions Portfolio Management
Jelle Brons
Portfolio Manager, Global Investment Grade Credit
Nathaniel Brown
Director of the PIMCO Foundation
Erin Browne
Portfolio Manager, Multi-Asset Strategies
Libby Cantrill
Executive Office, Public Policy
John R. Cavalieri
Asset Allocation Strategist
Josh Davis
Global Head of Client Analytics
Pramol Dhawan
Head of Emerging Markets Portfolio Management
Joachim Fels
Global Economic Advisor
David Fisher
Co-Head of Strategic Accounts
Adam Gubner
Portfolio Manager, Distressed Debt
Bill Gurtin
PIMCO Municipals
Gregory Hall
Head of U.S. Global Wealth Management
David Hammer
Head of Municipal Bond Portfolio Management
Mary Hoppe
Daniel H. Hyman
Head of Agency MBS Portfolio Management
Daniel J. Ivascyn
Group Chief Investment Officer
Mark R. Kiesel
CIO Global Credit
Christine Long
Head of Retirement Marketing
Jason Mandinach
Head of Alternative Credit and Private Strategies
Chantal Manseau
Rene Martel
Head of Retirement
Scott A. Mather
CIO U.S. Core Strategies
Sean McCarthy
Head of Municipal Credit Research
Mohit Mittal
Portfolio Manager, Liability Driven Investment and Credit
James Moore
Alfred T. Murata
Portfolio Manager, Mortgage Credit
John Murray
Portfolio Manager, Commercial Real Estate
John Nersesian
Head of Advisor Education
Roger Nieves
Senior Advisor
Jason Odom
Strategist, Asset Allocation
Rick Pagnani
Head of Insurance-Linked Securities
Sonali Pier
Portfolio Manager, Multi-Sector Credit
Christina Pihos
Defined Contribution Marketing
Steven Pogorelec
Global Wealth Management
Chitrang K. Purani
Portfolio Manager, Financial Institutions
Libby Rodney
Steve A. Rodosky
Portfolio Manager, Real Return and Long Duration
Emmanuel Roman
Chief Executive Officer
Steve Sapra
Client Solutions & Analytics
Jerome M. Schneider
Head of Short-Term Portfolio Management
Marc P. Seidner
CIO Non-traditional Strategies
Greg E. Sharenow
Portfolio Manager, Real Assets
Anmol Sinha
Fixed Income Strategist
Candice Stack
Head of Client Management, Americas
Cathy Stahl
Global Head of Marketing
Tim Steffen
Senior Consultant, Advisor Education
Christian Stracke
Global Head of Credit Research
Geraldine Sundstrom
Portfolio Manager, Asset Allocation
Richard Thaler
Distinguished Service Professor of Economics and Behavioral Science at the University of Chicago's Booth School of Business
Mark Thomas
Account Manager, Global Wealth Management
Jessica K. Tom
Senior Credit Analyst
Eve Tournier
Head of European Credit Portfolio Management
Jerry Tsai
Quantitative Research Analyst
Jamie Weinstein
Portfolio Manager, Head of Corporate Special Situations
Tiffany Wilding
North American Economist
Kevin Winters
Alternatives Strategist
Andrew T. Wittkop
Portfolio Manager, Treasuries, Agencies, Rates
Chris Brightman
Chief Investment Officer, Research Affiliates
Ben S. Bernanke
Chair, Global Advisory Board
  • Alphabetical
  • Most Recent
Section : Date : Experts :
Reset All
Beyond the Paris Agreement: Corporate Investing and Climate Change
Quick Takes: A Look at Today’s High Yield Muni Market
Unlocking Alternatives: Opportunities in Insurance-Linked Securities
EM Debt at PIMCO: Well Positioned for Opportunity
Stepping Out From Cash: Short-Term Strategies for Today’s Markets