The goal of the GAME conference is to fill the gap between what happens in the classroom and what happens in the real world of finance. -Dr. Sauer
Top 5 takeaways from Dr. Moore
- Much like real estate agents, Wall Streeters tend to say it is always a good time to buy.
- We need legal immigration for growth. U.S. productivity not increasing and I suspect declining value applied to education and training is a major culprit.
- Removal of U.S. from TPP was a big blunder. It was an anti-China policy. This makes the U.S. less important in Asia trade. Brexit was a mistake like the TPP pullout. [3]
- Analytical skills are critical to get a job.
- Soft skills such as communication are lacking. Can you communicate the truth with clarity?
Global markets panel
- Abbey Cohen?
- Low unemployment data shows 2nd of 2016 was a period of accelerating economic growth globally and in the U.S.
- Equity markets are fairly priced given the economic conditions. [1]
- U.S. political policy creates uncertainty. Inconsistent policy proposals by current administration, elections around the world, Brexit, all add to uncertainty.
- Given the solid economic baseline, it will take a lot to unsettle markets, but they can be unsettled.
- Bonds are overpriced around the world therefore rates are tools.
- Rates are very, very, very low. Even with a few raises, rates will be very, very low. This won’t be a big damper on homes, cars, or other rate-sensitive sectors.
- David?:
- U.S. economy has a supply-side problem.
- Plain-vanilla investing won’t generate much return.
- Don’t disregard Europe.
- We have a healthy tortoise, not a sickly hare.
- We don’t have enough workers and their productivity has not grown.
- Baby boomers retiring in large numbers
- U.S. economy can not grow further without legal immigration. [2]
- We are at full employment.
- Recommended portfolio warning label: past returns can harm future results.
- Last 30 years 60/40 stock/bond portfolio -> 8%
- Next x years 60/40 stock/bond portfolio -> 4%
- Last year: Return of the Jedi
- This year: Empire strikes back
- Investing in Europe can add alpha
- 30 year bond bull market
- 8 year equity bull market
- Stocks are a little high. [1]
- Ralph
- Must be aware of what is going on outside of markets.
- Wall Street loved Ronald Reagan. Reagan/s honeymoon lasted 6 months (markets up 15%).
DJM question: Was there also a George W. Bush honeymoon? - Many trends reversed course after repeal and replace did not occur.
- Ralph raised his cash position after 1st policy failure. May raise more.
- Dow -27% in 1.5 years after Reagan/s honeymoon.
- 3rd year is strongest in presidency.
- Abigail from Bloomberg
- Need to look beyond equity markets.
- Reinflation is being watched
- Oil peaked then fell off
- USD peaked then fell off
- Bonds: 10 year yield rose from 2.05 to 2.30
- VIX trading at all time lows for long time. [1]
- Will oil remain low.
- David
- Saudi is losing oil power.
- Expectations of shale oil production is high.
- Shale production can ramp up and down quickly.
- Will see oil @ $40-$60 for a long time.
- Where will Saudi Arabia be in 10 years? Need to know this or think about this when considering an Aramco purchase.
- When you buy a stock you buy a stream of earnings.
- Abbey Cohen
- China accumulated cash largely as a result of U.S.
- USD is a global reserve currency -> adds to China’s USD holdings.
- China has a desire to be a global reserve currency, starting with a regional reserve currency.
- Removal of U.S. from TPP was a big blunder. It was an anti-China policy. This makes the U.S. less important in Asia trade. [3]
- David on Brexit
- Brexit, like the TPP pullout, is a huge mistake.
- We need to educate voters.
- Brexit is bad for Britain, not so bad for Europe.
- Tariffs are bad:
-
An eye for an eye makes everyone blind. – Ghandi
- Euro is like Hotel California. You can check in but you can’t check out.
- Brexit will be cautionary tale for the rest of the world.
- Smart regulation is better than deregulation.
- Abbey Cohen
- Little understanding of long-term improvement
- Need immigration + education. [2]
- 2 million unfilled manufacturing jobs: need more skilled workers.
- Beware: short-term “goosing” of GDP growth may not help in the long-term.
- Shortage of dollars spent on research. We were at the top, now were are at the bottom of the top 1/3. [2]
- Basic research down 30% in current administration budget proposals -> not investing in capital / people / research. [2]
- Retail spending was low even though consumer confidence was up.
DJM: Can those “confident” consumers actually spend?