First Eagle's 3Q21 Market Overview: Against Perfection

Summary

• First Eagle Global Value Team uses a bottom-up, fundamental investment approach and seeks long-term growth of capital by investing in a range of asset classes from markets in the US and around the world.
• While equity valuations suggest little room for error, mounting input cost pressures threaten the very high profit margins that have supported corporate earnings growth.
• With “transitory” inflationary pressures proving to be quite persistent, the Federal Reserve has grown increasingly hawkish. With tapering and rate hikes on policymaker radars, caution may be warranted in an environment of uncertain future liquidity.
• China’s re-embrace of “common prosperity” may improve the country’s socioeconomic balance, but a sweeping realignment of power between the government and business risks upsetting a private sector that has been key to economic and job growth, with unknown potential impacts on the country’s and the world’s economic trajectory.
• We continue to position our portfolios for resilience from the bottom up, targeting companies that we believe offer the opportunity for durable wealth creation over the long term.