2013 Asset Allocation – A credit-based disequilibrium approach
Preliminary estimates of the ex-ante natural rate of interest for 2013 – based on a credit disequilibrium framework – highlights positive profit growth for the United States. However, the ex-ante estimates for the United Kingdom imply a continued poor...Good news for the great rotation into equities – US natural rate of interest rises for first time since 2010
Over the last few weeks a debate has broken out as to whether we are on the cusp of a great rotation into equities. Much of the focus of this debate has been trying to assess when yields on US Treasuries will start to rise, thus causing investors to shift their assets...Why bond investors have to care more about inflation than NGDP
A recent debate on the merits of NGDP targeting between Scott Sumner and Charles Goodhart has opened up an interesting discussion as to what bond investors should care about – inflation or the level of NGDP. Goodhart argued in the FT that the “likely implications of a...Why a 5% NGDP target will provide investors with the next asset bubble to ride
Most investors got caught out by the last monetary policy fad by using the level of inflation as a proxy for asset price sustainability and lost a great deal of money. As a result many economists have become critical of the utility of inflation targeting. But will the next big idea be any different? The next big thing in monetary economics may well be for central banks to target nominal GDP. Unfortunately “the next big thing” in monetary economics does not have a very good track record.