July 14, 2016
Dear WEALTHTRACK Subscriber,
For inspiration and levity I occasionally turn to Lewis Carroll’s classic,
Alice’s Adventures in Wonderland. As I survey the still unfolding saga of Brexit, spreading negative interest rates around the world and the unsettling political scene in Europe and the U.S. two quotes seem particularly apt. As the Cheshire Cat told Alice about Wonderland: “We’re all mad here.” And as Alice opined: “it would be so nice if something made sense for a change.”
This week’s guests are trying to make sense of highly unusual and in some cases unprecedented developments. One of those is Brexit. After decades of opting into the European Union, albeit on some of its own terms such as keeping the pound sterling as its currency, the United Kingdom opted out. A pressing question is will Britain be the lone exception, or the first of many to do so?
A recent Pew Research poll found the EU was unpopular among substantial numbers of citizens in many countries. 71% of Greeks view the EU unfavorably, 61% of the French do, 49% of Spaniards and 48% of Germans agree.
Since the financial crisis there has been talk of Grexit, Greece’s possible exit from the Eurozone. The latest candidate is Italy with “Quitaly” envisioned as its struggling banking industry reels under pressure from EU regulators.
Then there is the impact of the unprecedented easing policies of central banks in major developed countries. On this week’s program, we’ll show you a chart from Evercore ISI that tells the story of the “Incredible Balance Sheet Expansion” of the big three. Since 2009, the Federal Reserve, European Central Bank and Bank of Japan balance sheets have increased a cumulative +$8 trillion! Among other things, this helps explain why bond yields have plunged. The yield on the benchmark U.S. Treasury 10-year note has hit new lows in recent weeks, while yields on German and Japanese bonds are trading below zero in negative territory.
In the week after the Brexit vote, Evercore ISI counted 18 more easing moves by central banks. How do these developments affect global economies and markets?
On this week’s WEALTHTRACK, we will hear the views of two experienced global investors. Nicholas Sargen, Chief Economist and Investment Strategist at Fort Washington Investment Advisors, the asset management arm of Western & Southern Financial Group will join us for a rare television interview. Sargen holds a PhD in Economics, and has been international economist, global money manager and Chief Investment Officer for several major financial firms as well as an official at the Federal Reserve Bank of San Francisco.
We’ll also be joined by William Wilby, in a WEALTHTRACK television exclusive. One of our Great Investors, now a private investor actively managing his own retirement account, Wilby was the Portfolio Manager of the award winning Oppenheimer Global Fund which was ranked number one in its category for the 12 years he ran it. A graduate of West Point, Wilby has a PhD in International Monetary Economics and has held various international finance and investment positions at several top financial institutions, including the Federal Reserve Bank of Chicago.
Both Sargen and Wilby believe the Brexit effect is far from over. I asked them why it is still so significant.
If you miss the show on Public Television this week, you can watch it at your convenience on our website. You’ll also find web exclusive EXTRA interviews with Sargen and Wilby about investing in the 21st century.
Thank you for watching. Have a great weekend and make the week ahead a profitable and a productive one.