Sector Spotlight: Consumer Staples
April 15, 2021
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Title: Recessionary Signals: Breaking the Links of the Global Supply Chain
Abstract: MFS' Brad Rutan discusses how the global supply chain might change going forward.
Thank you everyone for taking the time to join us today. So I am here in my home office, social distancing myself with Brad Rutan, who's joining us, who's Managing Director and Head of Global Product of Fixed Income.
The Corona virus, it's definitely shined sort of a spot light on how integrated China was with the global supply chain. So how's the global supply chain going to change?
I think CEOs have been thinking about this for some time, even before corona, but corona's really shed a spotlight on it. China's become a massive part of the world, as far as their contribution to growth and exports, tourism, et cetera. The last 15 years, they've doubled, tripled, even more, their contribution to these areas. What we do know is that many countries have a very large tie to China. They trade a lot with China. What we've seen, unfortunately, the past couple of weeks, since the coronavirus hit China first, we're getting the first signs of what's to come for other countries and they printed the lowest PMI numbers ever. I don't often trust data out of China, so I imagine maybe it's even worse than we saw.
But I think the point is this. It's not only important how much you trade with China, but think of an Airbus 380 jet and think of all the parts that go into that. There's about 4 million parts that go into that jet. Those parts come from 1500 companies, and those companies are spread out over 30 different countries. So it's not just important how much you trade with China, but your finished goods probably have a whole bunch of other transactions between other countries, in a big spiderweb of transactions that ends with the finished product.
All of those different links between countries and companies are broken right now. So it's not just China, it's our global supply chain, with China at the center of it, that's broken. I think that's something that CEOs are starting to think about right now and should we reshape that.
Thank you, Brad. I appreciate you spending time with us. It's always great to hear your insight. Thanks so much.
The views expressed are those of the speaker and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice from the Advisor.