Opinion

James Saft

Drawing a line between pricey markets and globalization: James Saft

Jun 26, 2014 21:34 UTC

June 26 (Reuters) – If global policy makers are wrong about
globalization, and they could be, we may be in for more low
growth, low rates and the high asset prices they support.

At issue is the bedrock belief that globalization lifts all
boats, making us all richer by allowing the flowering of
individual countries’ comparative advantage.

That some classes of people – low-skilled workers in the
West, for example – have not done well out of globalization
should by now be obvious.

The big question is whether this is a transitional problem,
a distributional one or something closer to a permanent
condition.

One person who has thought interestingly about these issues
is Stephen Jen, a hedge fund manager at SLJ Macro Partners. Jen
argues, picking up on points made by economist Paul Samuelson a
decade ago, that lagged effects of globalization may be behind
some of the peculiarities in both markets and economics we now
observe.

Likelihood and risk are not the same

Jun 25, 2014 19:46 UTC

June 25 (Reuters) – The GDP release is a salient reminder
that right now, the big risk for most investors is that the
consensus is too complacent.

How else to interpret a world in which U.S. growth falls at
an unexpectedly steep 2.9 percent annual clip in the first
quarter and yet stocks rally?

One easy conclusion is that everyone is leaning more or less
the same way, making the risk, if not likelihood, of an upset
all the greater. Low-probability events can have outsized
impacts.

The leveraged-up less well off and profits

Jun 4, 2014 21:11 UTC

June 4 (Reuters) – Americans are borrowing more, renting
more rather than owning, eating in restaurants more and saving
less, leading inevitably to questions of sustainability.

That’s true both for Americans and for the corporations
whose profits they create.

What’s more, the kind of financing backing all this
indicates that a goodly bit of the balance sheet straining
activity is concentrated lower down the income and wealth scale.
Juxtapose this with vertiginous rates of corporate profitability
(and intriguing hints that a top may have been hit) and you have
the making of some serious upcoming tests for the economy and
stock market.

Can the low volatility bargain hold?

Jun 3, 2014 12:05 UTC

By James Saft

(Reuters) – It is this year’s bargain: central banks will remain easy, allowing asset prices to march higher despite all those pesky details about growth and inflation.

There is lots of evidence to show this is a genuine phenomenon – the ECB is expected to ease on Thursday, perhaps in new and creative ways, and the Federal Reserve, while theorizing about some fine day it will raise rates, is careful not to encourage any breath-holding.

And markets are doing their part, with asset prices of both stocks and bonds rising slowly and steadily, all amidst unusually low volatility. Not only is the benchmark S&P 500 index up 5 percent this year, and 17 percent over one full year, yields on benchmark 10-year U.S. government bonds have fallen strongly in most major markets, powering gains almost across the board in fixed income.

Can the low volatility bargain hold?: James Saft

Jun 3, 2014 04:01 UTC

June 3 (Reuters) – It is this year’s bargain: central banks
will remain easy, allowing asset prices to march higher despite
all those pesky details about growth and inflation.

There is lots of evidence to show this is a genuine
phenomenon – the ECB is expected to ease on Thursday, perhaps in
new and creative ways, and the Federal Reserve, while theorizing
about some fine day it will raise rates, is careful not to
encourage any breath-holding.

And markets are doing their part, with asset prices of both
stocks and bonds rising slowly and steadily, all amidst
unusually low volatility. Not only is the benchmark S&P 500
index up 5 percent this year, and 17 percent over one
full year, yields on benchmark 10-year U.S. government bonds
have fallen strongly in most major markets, powering
gains almost across the board in fixed income.

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