Fed’s Inflation Target Misguided? Good vs. Bad Disinflation
05 May 2014 | There is a difference between “good disinflation” and “bad disinflation.” Recent disinflation is the result of a variety of factors, including technological progress, new efficiencies in business models and strengthening competition. The truly worrisome deflation we should be concerned about is driven by asset price declines.
US Economy And Monetary Policy
13 January 2014 | The US economy has become strong enough to grow on its feet, allowing the Federal Reserve to withdraw in measured steps the exceptional monetary stimulus. We believe that the process known as “taper” will unfold slowly as subdued inflation allows the Fed to buy some time after Quantitative Easing (QE) expires before raising benchmark interest rates.
CIO Letter: Bubble Detector
15 July 2014 | Summer is synonymous with vacatios, and vacation is synonymous with journey. Packing your GPS and checking the weather conditions are essential for a well prepared journey. Similarly, no well-prepared investment should be carried out without first checking the financial climate— although currently calm, history suggests it could soon turn—and reviewing the GPS of Global Markets. Our “GPS” for navigating market conditions (valuations) is highlighting that some areas of the financial markets are getting stretched. Core government bonds, credit markets and US equities are the most likely candidates for a bubble.