We recently chatted with Elga Bartsch, PhD, the BlackRock Investment Institute’s Head of Macro Research, to learn more about her.
This post features highlights from our discussion, including how the European sovereign debt crisis was a career defining moment and why you’ll find Elga practicing yoga, meditating and painting in her spare time.
It’s the latest installment in an ongoing series of Q&As with BlackRock Investment Institute members. The last one featured Ben Powell.
How did you know you were interested in the economy and research when you were younger?
I was always a curious kid. Growing up in Germany, I became interested in economics when I was still in high school and had the opportunity to take economics classes, which I tremendously enjoyed. There, we discussed a broad range of topics, and I was able to think through quite a lot of economic policy questions. These included how do you deal with the fact that there are some strong cyclical movements in economies affecting people’s job security, or how does the German system of codetermination that gives workers representation on corporate boards affect economic performance. And I was able to understand how crucial these questions are for many important social and political matters.
How did you get into the asset management business?
I started out my career at an economic think tank working on a variety of different topics, focusing on my PhD thesis in the field of environmental economics and managing a post graduate program in applied international macroeconomic policy research. Once I completed my PhD, I wanted to go abroad and initially intended to join an international organization like the OECD or the IMF. But I also remember the first time that I walked onto a trading floor, while I was doing my PhD, and noticed the different energy level or vibration if you will. This piqued my interest and was a factor that drew me to the financial industry. A work environment with such a high intensity and a steep learning curve really attracted me.
When I received job offers from the OECD and Morgan Stanley, I decided to join the investment bank. It was offering a much steeper learning curve; greater freedom to express one’s views and to produce one’s own forecasts; and the ability to be on a more accelerated career path than an official institution would have offered. In the end I worked in the economics research department at Morgan Stanley for more than 20 years, starting as a junior economist and rising all the way to Chief European Economist and eventually Global Co-Head of Economics.
At Morgan Stanley, asset management companies were my most important clients. I would spend a lot of time speaking with them, discussing my macroeconomic views and their investment implications. But I wasn’t involved in the actual investment process itself. So last summer, I decided to move into the asset management itself by joining BlackRock, allowing me to get closer to the investment decisions.
What is your approach as Head of Macro Research for the BlackRock Investment Institute (BII)?
Macro research at BII is different from research on the sell-side in the sense that it tends to be more thematic. Instead of providing point forecasts on selected economic indicators or commenting on monthly data releases, we try to provide differentiated research on the broader themes driving financial markets and the economic debate (read more on BII’s key themes in our latest Global investment outlook). Other key aspects of our work at BII: providing a robust analytical framework – including novel empirical research that goes over and above popular nowcasting indicators; facilitating debate among the investment professionals within BlackRock’s investment platform; and helping BlackRock clients more broadly.
What was the biggest challenge of your career?
The biggest challenge of my career was probably also my biggest career breakthrough, as these two often go hand in hand. For me it was the euro crisis; when in the wake of the Global Financial Crisis, Europe – which I covered as Morgan Stanley’s Chief European Economist – got into some serious trouble due to the possibility of sovereign debt defaults and the specter of countries possibly existing the euro. In a fast-moving environment, I had to gain an understanding of completely new concepts; if you are a developed market economist, you typically don’t have to deal with sovereign defaults and the kind of market dislocation we saw at the time in the euro area.
There were many unprecedented market-moving events that needed a timely analysis, without a playbook to rely on. The news flow was coming in hard and fast, and a lot was at stake for many clients. In this situation, you needed to form a balanced objective view fast, but also aim to be correct more often than not. Because there were so many moving parts, there was enormous demand for macro insights. As a result, economic analysis went from ‘something nice to have’ to ‘a must have’. So, suddenly not only did the meeting and call requests skyrocket, but I was able to connect with a different level of seniority in terms of the investor base. Also, policymakers started to call to understand what was going on in financial markets. So, for me, the euro crisis was a complete game changer career-wise.
What is the toughest part of your job?
What is challenging is that you are doing global economics, in which there are so many moving parts. You need to decide where you are going to spend your time, focusing on where you can find something interesting to say in a reasonable time frame, and you need to get those decisions right.
At any given moment, there are a million different things you could focus on in global economics. You could spend all day watching the news flow rolling in, but you also need to sit down and form your differentiated view on the global macro environment. There are a lot of smart people looking at these issues in the financial industry, the public sector and in academia. So, you need to find a way to say something new that is more likely to be right than wrong and that is different from the prevailing consensus view. If you are just narrating a view that is already fully priced into markets, there is limited value added attached to that. If you happen to share the consensus view, it is important that you ask yourself where it could be wrong and assess the balance of risks to the current market environment.
What is your favorite part of your job?
One of the really fun things about economics is that there are so many different topics to look at using a rigorous framework – from why productivity growth is falling and where we are in the business cycle to the drivers of the present populist backlash and sustainability issues. That there are so many topics that you can apply the analytical framework of economics to keeps it interesting. This variety can also be bewildering. Each time you start to work on a new research project, you effectively jump in on the deep end of the unknown, aiming to understand the key issues and latest academic thinking. If you already know the answer going in, it would not really be research. Then you also need produce robust empirical analysis to back up whatever hypothesis you came up with and pray that the data support the thesis.
By using an economics framework you often are able to reduce complex real-world problems into the key components. I also enjoy interacting with people and debating ideas and viewpoints with a wide range of experts and practitioners. And I consider myself to be particularly fortunate to have such a broad range of talented colleagues to debate macroeconomic views with at BlackRock on a daily basis.
What achievement are you most proud of?
With the benefit of hindsight and seeing how materially women are underrepresented in economics today, I’m particularly proud that I not only studied economics, graduated top of my class and completed a PhD, but also that I went on to a successful career as a market economist in the private sector. Interestingly, my high school economics class started out with three girls out of about 30 students. The other two girls left within the first couple of weeks. For the next three years, I was the only girl in a class with a lot of math geeks, rather unusual in a school that had a 50-50 gender split. But in the course of my career, I realized the fact that I was different from many of my peers translated into an advantage in terms of developing a differentiated view.
What advice would you give to young people just starting out their careers?
I think as you set out, you need to ask yourself ‘where can you make a difference’ in the sense of where are your talents most differentiated. It is important to understand that this tends to often involve pushing yourself out of your comfort zone. While you might feel more comfortable if you are similar to everybody else in your peer group, you will have more to add to the team if you differ in some key aspect. Personally, I also believe that you will have a much more interesting and rewarding career if you try to move out of your comfort zone. This is also what keeps it exciting and will likely make for a faster career progression.
In the financial industry through the dynamics of the broader industry, you are basically forced to move out of your comfort zone almost constantly. My preference has always been for constantly being on the move. The financial industry, being very dynamic and going through a lot of change, basically means even if you remain in a similar seat, what you work on and how you work will change dramatically. I was definitely pushed out of my comfort zone a few times. But I also pushed myself out of my comfort zone, including by taking on extracurricular activities such as serving on the European Central Bank Shadow Council.
What else are you interested in or involved with outside of work?
Working long hours and traveling quite a bit, I make a conscious effort to spend sufficient time recharging and refocusing. I mainly do this through yoga, meditation and spending time outdoors, especially hiking. But I’m also interested in modern literature and contemporary art, and occasionally, if I find the time, I might even grab my easel and try to get something on a canvas. I was fortunate enough to be given painting instructions by my grandmother when I was little. She was quite an accomplished artist and taught me many things, including the chemical reactions that you need to be aware of when mixing different types of oil colors, and how to really observe the colors and light reflections when painting en plein air.
What do you tend to paint?
Usually, these days, it will be something abstract in either oil or watercolors. I’m no longer attempting to paint anything in nature, but instead allow my imagination to lead the way. It is interesting how quickly it allows you to get into the flow and completely switch off.
For more, watch Elga in the video below, read posts by Elga Bartsch, PhD, and stay tuned for the next interview in this Q&A series.
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