Models of the economy are pretty useful tools. And simple models are some of the most useful. They help people envision how the world works. They help organize thinking.
We’ve had, finally, after many years, an acceleration in earnings growth, far faster than the kind of growth we’ve seen in developed markets, and that’s expected to continue into 2018; and I think that’s going to be an important underpinning of strong returns for emerging-market investors.
The Federal Reserve has a problem. At 4.1%, the jobless rate is already well below the 4.6% it thinks unemployment would/could/should average over the long run. We think the unemployment rate should get to 3.5% by the end of 2019 and wouldn't be shocked if it got that low in 2018, either.
The business cycle is one of the most important drivers of investment performance. As the nearby chart shows, recessions lead to outsized moves across asset markets. It is therefore critical for investors to have a well-informed view on the business cycle so portfolio allocations can be adjusted accordingly.
Now that Black Friday has come and gone and Cyber Monday is upon us, you're going to hear a blizzard of numbers and reports about the US consumer. So far, these numbers show blowout on-line sales and a mild decline in foot traffic at brick-and-mortar stores.
Emerging markets offer investors plenty of opportunity, but managing downside risk effectively is critical. A flexible framework that integrates multiple asset classes can help.
We've called it a "Plow Horse" economy, which was our metaphor invented to counter forecasters who said slow growth meant a recession was on its way. A Plow Horse is always slow, but that slowness hides underlying strength – it was never going to slip and fall. Now, the economy is accelerating.
Are you an investor or a trader? Investors think long-term, while traders focus on short-term price movements.
Washington D.C. used to complain that Ronald Reagan employed a strategy of "starving the beast" – cutting taxes so that new spending was tough to legislate. Now, D.C. seems to employ the strategy of "gorging the beast" – spending so much that tax cuts are hard to pass.
The Trump administration announced Jerome Powell as its choice for Federal Reserve Chair on November 2. The following are some thoughts on what we could expect from a Powell appointment.