managers Erin Browne and Geraldine Sundstrom. Thank you both for joining us today.

Erin, to get us started, can you give us a summary of the key takeaways of the asset

allocation outlook? Sure. Thanks, Jason. We've moved past the

early cycle environment that really predominated risk taking in 2020, post the pandemic lows,

and we're moving really into a mid-cycle environment, which tends to be a constructive

environment for risk, broadly speaking. That said, we are also moving past what we

define as the four peaks. That's a peak in growth, a peak in inflation, peak in policy

support, but also importantly, a peak in the post pandemic environment.

And what this ultimately means is that we think from here, we're going to be moving

into a midcycle environment that's still going to be expansionary, albeit with slightly

lower growth than we've seen predominate over the last year or so, but it's still

a very constructive environment for risk taking more broadly.

Thanks, Erin. Can you expand on the implications of a mid-cycle environment for different asset

classes? Mid-cycle environments tend to be quite constructive,

as I noted, for risk taking and for growth oriented assets. What's interesting, though,

is that as we move into a mid-cycle environment, equities tend to be, on a risk adjusted basis,

the best asset class in terms of performance. Equities tend to outperform both bonds as

well as credit. However, there is a distinction, as we move from an early cycle environment

into a mid-cycle environment. In early cycle environments, beta tends to be the predominant

driver of returns, particularly for equities. As we move into a mid-cycle environment, we

tend to see a lot more dispersion, both intra-asset class as well as across asset classes. And

security selection and stock selection becomes much more important in terms of defining returns

in a mid-cycle environment than what we experienced in the very beta driven early cycle environment.

And as a result of that, we think that going forward, dispersion is going to be the driver

of returns and stock and security selection is going to be increasingly important.

Geraldine, moving over to you, as we move past the pandemic, PIMCO has been evaluating

which changes could have a lasting impact. Can you speak about some sectors that may

benefit from these more permanent changes? Each economic cycle is different, and as we

reach mid-cycle, as Erin said, we need to become a lot more selective in our security

selection. Therefore, we need to ask ourselves, what is different this time?

And certainly of late, one factor has gained incredible traction, and that has to do with

ESG consideration. Indeed, when thinking about the environment,

already 110 countries have pledged to a net zero CO2 future, and this means that we are

likely to see in years ahead higher demand for certain goods and materials. We could

also see big developments in new technology in energy production, transport, or construction.

Now, looking at the social consideration, a number of things have been happening. We

are seeing large multinational companies increasing substantially minimum wages. We are also seeing

efforts from government to redistribute wealth. The G7 has launched an initiative for a global

minimum corporate tax. This could mean that with this effort and this redistribution,

we could see more demand for robotics and automation, but also more consumption and

potentially less saving. Last but not least, there are governance considerations.

We are all very well acquainted with typical corporate governance. That said, there's

also a new angle to it, which is more of a geopolitical nature.

The pandemic has put forward the issues that supply chain, long supply chain, can have,

and there are now efforts from various governments around the world to secure key strategic goods

like semiconductors, batteries, or medical supply.