In an era of policy-driven capital markets it’s essential to stay in tune with and even anticipate major policy shifts before they are yesterday’s news. The labor force participation rate is one of the key economic data points that will have an impact on Fed policy in the coming quarters. http://www.seasoninvestments.com/insights/lack-of-participation/
The price of gold is reflecting the tug of war between near-term expectations of a global recovery and long-term inflation risks. As the old saying goes, “gold is no one’s liability” which makes it the perfect life raft for investors with a long-term perspective faced with a global economy that is drowning in debt. http://www.seasoninvestments.com/insights/a-golden-life-raft/
The global financial crisis in 2008 was a game changer on many levels. One of which was, and continues to be, the gross reality that developed economies can no longer borrow their way to prosperity. According to many central banks, the answer to this problem is to export unemployment to other countries through competitive currency devaluation. http://www.seasoninvestments.com/insights/exporting-unemployment/
Our modern society believes that pain and sacrifice are unnecessary evils that can be alleviated by borrowing from our future prosperity. We can think of this as Wimpy economics since we would “gladly pay you Tuesday” for a hamburger today. http://www.seasoninvestments.com/insights/wimpy-economics/
The US Treasury has just announced that it will sell its remaining 234 million AIG shares in its sixth offering since the rescue, thereby securing a $4.1 billion profit on its investment in AIG stock. But while the economic tethers of the bailout will soon be cut free, has the success of the AIG bailout created a slippery slope for future bailouts? http://www.seasoninvestments.com/insights/the-best-of-a-terrible-set-of-choices/
The current path of government debt and central bank balance sheet expansion is clearly unsustainable.Everyone knows this and yet interest rates are at historically low levels. Will there ever be a tipping point which changes the direction of interest rates, and if so what will be the catalyst and when will it happen? http://www.seasoninvestments.com/insights/tipping-point-for-interest-rates/
QE3 will have no real impact on economic growth since it will not loosen any of the “binding constraints” preventing growth from accelerating. The pop in stocks and commodities following the Fed’s announcement has been referred to over and over again as the “sugar rally”, making it analogous to the surge of nervous energy one gets after indulging in too many sweets. http://www.seasoninvestments.com/insights/pour-some-sugar-on-me/
It has long been debated to what extent the ECB will be willing (or even legally capable) of engaging in outright bond purchases of Eurozone countries’ sovereign debt. Such programs have already been implemented throughout this crisis, but such efforts have been limited and have fallen short of anything akin to the US Fed’s quantitative easing programs. http://www.seasoninvestments.com/insights/will-the-ecb-go-for-gold/
A common concern among investors today is the prospect of runaway inflation. The knee jerk asset that many flock to for this purpose is the Treasury Inflation Protected Security (TIPS). It’s a common misconception that the primary role of TIPS is as an inflation hedge, which reflects a lack of understanding of the intricacies of how TIPS actually work. http://www.seasoninvestments.com/insights/are-tips-really-inflation-hedges/
We have been in a policy-driven market now for roughly four years. Both monetary and fiscal authorities have played a heavy-handed role in the economy and capital markets over this time period. Global central bank (monetary) policy is on our Macro Radar due to its post-financial crisis impact on investor sentiment and the performance of both stocks and commodities. http://www.seasoninvestments.com/insights/macro-update-central-bank-policy/
As we head into the New Year there are four factors on our “Macro Radar” that we believe will be the primary drivers of financial market performance in 2012, which means we will spend a lot of time proactively focusing our research efforts on understanding and monitoring their development throughout the year. http://www.seasoninvestments.com/insights/macro-update-2012-macro-radar/
