International and Global Markets Commentary & Investment Outlook


An era of low inflation and low interest rates has ended. Inflation is running at its fastest pace in decades in many places, and a range of central banks are pushing rates quickly higher. The war in Ukraine has only intensified the picture. It has been the geopolitical wild card, and it has further disrupted critical energy and food supplies. More likely, interest rates will probably need to stay high enough for some time to meaningfully weigh on the economy. Together, these things increase the likelihood for more market choppiness.

Our investment philosophy emphasizes businesses that benefit from secular trends and possess strong competitive advantages and market positions. Additionally, portfolio companies are purposefully selected that earn attractive profit margins, carry strong balance sheets, and generate cash on a consistent basis. We expect these attributes to hold tack even if the macro backdrop is deteriorating. For these reasons, portfolios should be able to outgrow market growth rates over the long-term.

In this inflationary environment, we have also made ongoing adjustments to emphasize holdings that we believe are well-suited to transmit pricing power or are valued more attractively. These attributes should help protect against two of the most pernicious effects of inflation for equity investors, namely the compression of profit margins and the compression of valuation multiples.

Thank you for entrusting us to invest your precious capital and to navigate this increasingly uncertain market environment.


The global economic outlook has worsened in recent months. Surging inflation is a global phenomenon, in both developed and emerging economies alike. Covid-induced supply disruptions have collided with strong consumer demand for goods and services in the reopening. The war in Ukraine has only intensified the picture by further disrupting critical energy and food supplies. Central banks have responded by sending interest rates higher and in larger increments. Additionally, central banks have signaled their acceptance of any resulting economic consequences from the vigorous push to bring down inflation.