The 2013 Principal Global Investors/CREATE-Research report is due to be launched on June 17th. Each year, a survey focus is chosen after canvassing the views of thought leaders in the investment value chain worldwide. The research topic selected for 2013 is investing in today’s debt-fuelled world. The resulting research report, Investing in a Debt Fuelled World, takes a look at what it means to be an investor in a world where many major economies are trying to cut their debt mountains mostly via a combination of low interest rates and inflation. Read more
Posts from the ‘Multi Asset Advisors’ Category
Monetary accommodation was on the rise in May. Of the twelve major bank meetings during the month, nine resulted in cuts, two central banks held policy steady, and only one actually increased rates to control inflation.
While the Federal Reserve didn’t change direction, it sent mixed messages regarding its quantitative easing (QE) program. The minutes from the April-May FOMC indicated willingness to “increase or reduce” the pace of QE, a change from previous meetings that were primarily focused on QE reduction aspects. Read more
If you’re looking for a gauge on U.S. inflation, you’ve got two primary options. There’s CPI – the consumer price index. And there’s PCE – personal consumption expenditures. Both CPI and PCE serve as broad measures of inflation (i.e. how much prices are going up on consumer goods and services). That’s useful information if you’re trying to predict economic activity, because rapid and unexpected inflation can be bad for economic growth. So, what would you say if I told you that while CPI and PCE generally track in the same direction, there is a difference between the two estimates? And what if I told you that in March 2013, that difference hit its highest level since the start of the 2008-2009 recession? In March, core CPI showed 1.9% year-over-year growth, while core PCE showed a 1.1% increase over the same period. Sure, it’s only a difference of 0.8%, but 0.8% could mean the difference between extending quantitative easing and wrapping it up. 0.8% could mean the difference between projected growth and a return to recession. Read more
There’s been a lot of talk (and blogging) this week about the Milken Global Conference that’s going on in Los Angeles. I wasn’t able to attend in person this year, but, after looking at their website, I’m amazed at how much of the conference can be experienced virtually. The majority of the sessions are posted to their website within a few hours of their completion. After looking around, I was struck by the connections you can make at the Milken Global Conference. I’m not talking about the networking type of contacts – networking from 1,700 miles away is difficult, at best. No, I’m talking about how the conference’s melding of business, political, and academic leaders can serve to demonstrate the similarities in our experiences, whether they’re separated by thousands of miles or millennia.
As an example, I watched a panel discussion called “The Rise and Decline of Nations and Civilizations,” whose participants included Pulitzer Prize-winning author and UCLA professor Jared Diamond, and best-selling author and Harvard professor Niall Ferguson. Read more
Last week, the economics blogosphere was ablaze with commentary on an economics paper from 2010 called “Growth in the Time Debt.” The paper was by Carmen Reinhart and Kenneth Rogoff, both of Harvard, and has come to be known as just “Reinhart-Rogoff.” What’s so big about a three-year-old economics paper? Well, most of the current calls for austerity in the U.S. and around the world cite this paper as the major influence in cutting government spending…oh, and the conclusions of the paper turn out to be wrong. Read more
Continuing my previous thoughts on last week’s Atlanta Federal Reserve Financial Markets Conference, I thought I’d cover another of the conference’s big themes: the efficiency of the regulatory system.
Two things matter to a well-functioning regulatory system: the complexity in the regulation and the political system that backs up that regulation. Political systems matter because of the potential influence on a majority party. Democracies where one party cannot easily take control (political economists call them “liberal democracies”) are least likely to have banking crises. This is because liberal democracies such as Canada and New Zealand are less likely to have one party in the majority, one party whose special interests form the regulation of the banking system.
Complexity also matters. Read more
As you may recall, earlier this year, payroll taxes in the U.S. went up by 2% and I discussed how that tax increase could potentially affect spending. Well, we’re done with first quarter, so how have consumers reacted to that $16 less (based on average weekly earnings on non-farm payrolls) in take-home pay each week?
- Consumer spending increased the first two months of the year (up 0.7% in February and up 0.4% in January).
- Consumer confidence took a temporary hit in January, and then generally recovered in February and March.