The Outlook


Welcome to The Outlook archives, where you can view several past issues featuring our investment and economic thinking. The Outlook is available in both PDF* and HTML format. We recommend that you review the PDF format, as it is closer in appearance to our printed version.

January 2016

Market Update

What we are observing in the markets today is closely following the views we expressed in our year-end Outlook, and events are unfolding in a more compressed timeframe. The year began with the Chinese currency weakening, the Chinese Purchasing Managers Index (PMI) and the U.S. Institute for Supply Management Manufacturers Index (ISM) both disappointing, oil prices declining sharply, and the Saudi government executing a noted Shiite cleric. China’s slowing economy in tandem with lower oil prices is leading to reduced expectations for global growth and a stronger U.S. dollar, which in turn is placing stress on foreign dollar debts and countries needing to import goods that are traded in dollars. These events have combined to unsettle the markets, and conditions remain in place for volatility.

December 2015

Crises, Divergences, and Opportunities

“We have forgotten that history is fundamentally tragic. The French have to prepare for this threat, bear in mind that there will probably be more attacks. It’s a war, not a conventional one but a war. I know some countries have refused to use that term to avoid giving terrorists the pleasure, but we have to say things as they are.”

French Prime Minister Manuel Valls,
as quoted in the Financial Times on 11/26/15

September 2015

“The Future Ain’t What it Used to Be”

Central banks have been responding to an accident-prone and fragile global economy with the most accommodative monetary policy structure in history and are likely to continue this approach for some time. However, monetary policy has its limits and market participants are becoming increasingly concerned that we may be approaching those limits. The resulting uncertainty and volatility have led to distortions in the prices of businesses which create opportunities for patient, long-term investors. This is a good time for investors to have higher cash balances, not as a market call, but rather to be in a position to take advantage of the opportunities presented. Because this is not an environment where all businesses perform equally, actively managed portfolios should benefit. The United States has been the primary beneficiary of this environment among leading economies. As the largest economy in the world and a safe haven, the United States has been attracting significant capital flows as it is the most important, resilient and adaptive of all the major economies. The U.S. is gradually improving in measures of industrial activity, employment, wages, housing, consumer net worth and consumer confidence. However, despite these improvements the Federal Reserve recently declined to raise interest rates even a quarter of a point citing the weak overall global backdrop. This continuation of record low interest rates for the past eight years should be proof enough that monetary policy alone cannot deliver sustainable growth without fiscal policy initiatives which are now needed to support more balanced growth. For investors waiting for a normalization of interest rates, the wait will continue to be long as it requires a return to “normal” economic conditions which cannot occur under present circumstances.

July 2015

The politics of Economics and the Economics of Politics

“In Europe, the only way to proceed is to proceed as we have always done, namely by following a pragmatic, step-by-step, flexible and rectifiable approach; proceeding only ever as far and as fast as the peoples and governments of Europe actually desire.”

– German Finance Minister, Wolfgang Schauble,

article in the Frankfurter Allgemeine Zeitung, 7/4/15