CPPIB's Mark Machin sees opportunities in emerging markets, cryptocurrencies 2.0
The head of Canada’s biggest public pension fund says the strength of the U.S. economy is directly impacting how he decides to invest the capital of the fund’s constituents.
“The U.S. dollar is strong because the U.S. economy has huge momentum right now,” Canada Pension Plan Investment Board CEO Mark Machin told BNN Bloomberg in an interview Tuesday. “Business confidence is at record highs, small business confidence is at record highs, household confidence: record highs.”
“There’s an enormous amount of both business and consumer confidence that is going to drive the economy for a while. That impacts thinking about where you put your dollars.”
However, despite valuations reaching historical highs, he still thinks there’s money to be made in the U.S. markets.
“Valuations are high on historical metrics, but it’s all driven by earnings growth in the longer term,” he said. “Earnings growth continues to surprise to the upside and given all of that confidence, business confidence, and the fact that money’s being invested, companies are investing in businesses rather than just doing buybacks. That could keep the momentum going for a while.”
Machin said there might be money to be made in emerging markets, calling the issues currently plaguing countries like Turkey and Argentina more “idiosyncratic” than “contagion”-based. However, he still likes the momentum of the U.S. economy.
“By some metrics it may be a highly-priced market. Certainly if you simply look at [price-to-earnings ratios] versus emerging markets, it’s very different,” he said. “But, I think you need to look at the underlying earnings momentum.”