GSE Report
December 06, 2013
2014 marks year five of a post-crisis global economic expansion that has been characterized by bumpy, below-par and brittle growth so far. If all goes well – and we are bold enough to believe it will – 2014 could also mark the transition to a sounder, safer and more sustainable second half of this expansion. Five tough transitions hold the key: For the economic expansion to embark on a sounder, safer and more sustainable second half, policy-makers around the globe will have to master five tough transitions in 2014...
“You simply cannot keep short-term interest rates negative for this long in the face of even modestly positive economic growth without generating financial imbalances and inflationary excesses down the road.”
David Rosenberg October 9, 2013
August 06, 2013
From 2009 lows the US economy has grown by $1.3 trillion while the US stock market has growm by $12.0 trillion (in July the S&P 500 set a new intraday high). Wall Street and capitalists have enjoyed a boom....while Main Street and the labor markets have struggled.
Policy, postiioning and profits (in that order) best explain the seeming disconnect between Wall Street and Main Street.
July 09, 2013
" The opiate of investors has been central bank liquidity. The degree of stimulus bas been unprecedented. But never was so much invested, by so many, on the view that the Fed would stay behind the curve. In our view that no longer can be guaranteed (our economists have pushed forward their tapering expectations). We believe liquidity withdrawal will not be painless and will create higher volatility."
Michael Hartnett
Bank of America Merrill Lynch Global Research
June 27, 2013
June 07, 2013
“[J]ust as profits are critical to the longevity of our capitalistic real economy so too is return or ‘carry’ critical to our financial markets. Without the assumption of ‘carry,’ or return over and above the fixed, if mercurial, yield on an economy’s policy rate (fed funds), then investors would be unwilling to risk financial capital and a capitalistic economy would die for lack of oxygen. The carry or return ...is most commonly assumed to be a credit or an equity risk “premium” involving some potential amount of gain or loss to an investor’s principal.”
May 06, 2013
“QE is a drug. It’s a drug that has not been tested and it is addictive. And the consequences are truly unknown. This is an experiment beyond the experience of anyone--any policymaker, or any academic or brilliant economist. Therefore, we have to be very prudent as to how we come out of this...”
Aram Shishmanian
CEO, World Gold Council
Milken Institute 2013 Global Conference
April 29, 2013
April 04, 2013
“...[T]his universal view that forecasts of [U.S.] energy independence and Fed reflationary policies are the answers to a country where 38 million adult households are on the receiving end of at least one federal government program (that would even make FDR blush), 14% of working-age population is either unemployed or underemployed, and 90 million Americans are out of the workforce completely is a bit bizarre and perhaps even a little dangerous. The U.S.A. may look good next to Europe, but that doesn’t say a whole heck of a lot in absolute terms. In fact, signs that the secular potential growth rate in America could be as low as 1.7% is, in fact, downright European and will hasten the day that inflationary cost pressures will force the Fed away from its ultra-accommodative monetary policy setting.”
David Rosenberg
Breakfast with Dave
March 27, 2013
March 06, 2013
”China is fully prepared [for a currency war should it happen]. In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.”
Yi Gang , China’s central bank deputy governor March 1, 2013
The recent equity rally has been ...a ‘monetary rally’ i.e., with little justification but stimulated by actual central bank activity, and probably more so, the perception of future central bank activity through investors. Now, herein lies the problem. Central banks’ balance sheets are no longer expanding. Admittedly much of the recent drop in assets is due to currency translation ... but I worry that this is the beginning of a trend which will prove a challenge for global equity markets.
Niels Jensen, managing partner of Absolute Returns Partners March 1, 2013
February 06, 2013
“The federal debt to GDP ratio jumped to 103.5% at the end of 2012, the highest since 1947. In spite of the [fiscal cliff’s] new taxes, this ratio will likely climb to 107% by the end of this year. Moreover, in 2010 the nonpartisan Congressional Budget Office (CBO) forecasted gross federal debt held by the public could reach 344% of GDP in 2050 and 947% in 2084, with entitlements playing an important role.”
January 07, 2013
“Alas, we are not in this Nirvana yet. There is a lot more wood to chop when it comes to deleveraging. Developed countries are awash in debt, and ballooning government debt is only part of the story. You have to look at all the debt in the ecosystem. It is not a pretty picture.
Globally, the total credit market debt-to- GDP is 350%: $200 trillion dollars of debt against global GDP of roughly $62 trillion
